State-owned media has highlighted a slew of key policy signals sent by the latest economic meeting of the Chinese Communist Party’s (CCP) Politburo.
The CCP Politburo held an economic work meeting on 31 July, with the official goal of analysing and researching current economic conditions, as well as making arrangements for economic work in the second half of 2018.
According to the official Xinhua News Agency the meeting highlighted a total of six key policy signals for economic work in the second half of the year.
i) Stability, and raising the foresight, flexibility and effectiveness of policy.
Wang Jun (王军), chief economist of Zhongyuan Bank, said that “the overall meeting was run through with the concept of active response and emphasised the term ‘stability.’
“This will be the main theme for proper performance of economic work in the second half.”
The meeting emphasised stability in six key areas, including stable employment, stable finance, stable foreign trade, stable foreign investment, stable investment and stable expectations.
The Politburo also emphasised the need to “firmly implement active fiscal policy and stable monetary policy, and raise the foresight, flexibility and effectiveness of policy.”
“Fiscal policy must play an even greater role with regard to expanding internal demand and making structural adjustments…it is necessary to properly grasp the sluice gate of the money supply and maintain rationally ample liquidity.”
The meeting also stressed the need to protect the lawful rights and interests of foreign invested companies in China.
ii) Making up for inadequacies, using the deepening of supply-side structural reforms to abet high-quality growth.
According to Xinhua expanding internal demand has become critical followed marked changes to the external environment.
The Politburo indicated that compensating for shortcomings is now the key mission of supply-side structural reforms.
“The next stage of capacity removal must focus on clearing out structural barriers and resolving deep-seated problems such as the slow pace of the disposal of zombie enterprises and low enterprise efficiency,” said Wang Jun.
iii) Risk prevention – finance must better service the real economy.
The Politburo pointed to the need for better integration of the prevention and resolution of financial risk with servicing of the real economy, while also stressing the need to firmly and effectively perform deleveraging work.
According to Xinhua efforts to maintain stable and healthy growth of the Chinese economy will benefit from “rationally ample” liquidity, while measures should be implemented to ensure that funds are directed towards weak areas.
“The traditional services model of financial institutions is often unable to adapt to the financial needs of small and micro-enterprises,” said Dong Ximiao (董希淼), a researcher from Renmin University’s Chongyang Institute for Financial Studies. “This requires further spurring of financial innovation, and guiding financial institutions towards small and micro financial services.”
iv) Breaking through difficulties, firmly deepening reform and opening to stimulate economic vitality.
The Politburo meeting pointed to the need to further expand opening and greatly reduce thresholds for market entry, as well as drive the horizontal development of the Belt and Road Initiative and successfully stage the first China International Import Expo.
v) Contain price gains, firmly and effectively resolve problems on the real estate market.
The Politburo indicated that it is determined to “effectively resolve problems on the real estate market, uphold the implementation of policies based on circumstances in individual cities, expedite balanced supply and demand, rationally guide expectations, rectify the market order, and firmly contain gains in housing prices.”
The meeting also stressed the need to accelerate the establishment of long-term mechanisms for expediting the stable and healthy development of real estate markets.
vi) Stable employment, effectively undertaking work to ensure the livelihood of the people and maintain social stability.
The Politburo flagged measures to ensure basic conditions in relation to incomes, education and social welfare, as well as the strengthening of poverty-alleviation work in indigent areas, and strenuous efforts to maintain social stability.