Chinese President Xi Jinping (習近平) and other top leaders yesterday said they would adopt a more “relaxed” approach to monetary policy as they hashed out plans to boost the economy next year.
The world’s second-largest economy is battling sluggish domestic consumption, a persistent crisis in the property sector and soaring government debt — all of which threaten Beijing’s official growth target for this year.
Leaders are also eyeing the second term of US president-elect Donald Trump, who has indicated he would reignite his hardball trade policies.
Photo: Reuters
Yesterday, the Politburo Standing Committee of the Chinese Communist Party, the country’s top decision-making body, “held a meeting to analyze and study the economic work of 2025,” state news agency Xinhua said.
“We must vigorously boost consumption, improve investment efficiency, and comprehensively expand domestic demand,” Xinhua quoted officials as having said.
“Next year we should… implement a more active fiscal policy and an appropriately relaxed monetary policy,” they added.
The new wording for the monetary policy marks the first easing of the stance since late 2010, official announcements at the Politburo meetings showed.
China’s central bank has outlined five policy stances — “loose,” “appropriately loose,” “prudent,” “appropriately tight” and “tight” — with flexibility on either side of each.
China adopted an “appropriately loose” monetary policy after the 2008 global financial crisis, before switching to “prudent” in late 2010.
Beijing has unveiled a string of measures since September aimed at bolstering growth, including cutting interest rates, canceling restrictions on homebuying and easing the debt burden on local governments.
However, economists have warned that more direct fiscal stimulus aimed at shoring up domestic consumption is needed to restore full health in China’s economy as fears of a renewed trade dispute with the US mount.
The consumer price index, a key measure of inflation, came in at 0.2 percent, down from 0.3 percent in October, the Chinese National Bureau of Statistics said.
Fitch Ratings has slashed its economic growth forecasts for China next year and in 2026.
China’s GDP growth forecast for next year has been revised to 4.3 percent from 4.5 percent and the 2026 GDP growth has been revised to 4.0 percent from 4.3 percent, while the effective tariff rate on US imports from China is assumed to increase from about 10 percent to about 35 percent, Fitch said yesterday.
Beijing’s leadership also said it would intensify an anti-corruption drive, calling for a “high-pressure posture in punishing” graft.
Officials yesterday pledged to “strengthen the mechanism for investigating and addressing unhealthy practices and corruption.”
Additional reporting by Reuters
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