By Zhang Ailun and Yao Kaiwen
BEIJING (Reuters) – China’s top leader on Monday pledged to step up policy support for the economy amid a difficult post-epidemic recovery, focusing on boosting domestic demand, signaling more stimulus.
Growth in the world’s second-largest economy was sluggish in the second quarter amid weak demand at home and abroad, adding to pressure on policymakers to deliver more stimulus to shore up the post-pandemic recovery.
China’s Xinhua News Agency quoted the Political Bureau of the CPC Central Committee as saying that my country’s economy is currently facing new difficulties and challenges, mainly due to insufficient domestic demand, operating difficulties for some enterprises, hidden risks in key areas, and severe and complex external environment. By President Xi Jinping.
The Political Bureau of the Central Committee stated that China will implement “precise and forceful” macro-control, strengthen counter-cyclical adjustments, and adhere to a prudent monetary policy and a proactive fiscal policy.
Xinhua quoted President Xi as saying in a separate meeting that China would strive to achieve its annual development goals.
While China is on track to achieve a moderate growth target of around 5%, there is a risk that the annual target will be met. Analysts said it was the second year in a row that the conference had been missed.
Most analysts said policymakers were unlikely to introduce any aggressive stimulus amid concerns about rising debt risks.
Analysts at Capital Economics said the results of the meeting indicated that further policy support would be rolled out in the coming months.
“However, the absence of any major policy details announced does suggest a lack of urgency, or that policymakers are struggling to enact appropriate measures to shore up growth,” they said in a note.
A senior central bank official said earlier this month that the central bank will use policy tools such as the reserve requirement ratio (RRR) to address challenges facing the world’s second-largest economy.
Last week, the central bank kept lending benchmarks steady despite a slow pace of economic recovery.
Xinhua News Agency stated that China will actively expand domestic demand, increase residents’ income, stimulate economic growth through consumption, and accelerate the issuance of local special bonds to stimulate investment.
Xinhua added that the government will stimulate demand for cars, electronics and household products and boost tourism.
China will adjust the report and optimize real estate policies in a timely manner to deal with “significant changes” in the supply and demand relationship in the real estate market.
“This is an interesting signal, as the downturn in the real estate sector can be said to be the key challenge facing the current economy,” said Zhang Zhiwei, chief economist at Pindian Asset Management.
“The government seems to have recognized the importance of policy changes in the sector to stabilize the economy.”
Analysts expect China to ease restrictions on home purchases in some cities.
Xinhua News Agency stated that in the case of increasing local debt repayment burdens, China will effectively resolve local government debt risks and formulate a package plan to solve local debt problems.
Xinhua said China would improve the environment for the development of private enterprises and stabilize trade and foreign investment.
China also released guidelines last week to improve the private sector, vowing to make it “bigger, better and stronger”.