China’s leaders have vowed that domestic demand will boost economic recovery by 2024

Chinese President Xi Jinping (C), Vice President Wang Qishan, Politburo Standing Committee Member Zhao Leji, National People’s Congress (NBC) Standing Committee Chairman Li Zhanshu, Premier Li Keqiang, Politburo Standing Committee Member Wang Huning and Vice Premier Han Zheng have visited. Closing Session of the Chinese People’s… Get license rights Read more

BEIJING, Dec 8 (Reuters) – China will boost domestic demand and consolidate economic recovery in 2024, the Politburo, the ruling Communist Party’s top decision-making body, said on Friday, state media reported.

The government has unveiled measures in recent months to boost a weak post-pandemic economic recovery that has been held back by an asset crisis, local government debt risks, slower global growth and geopolitical tensions.

Ratings agency Moody’s issued a downgrade warning on China’s credit rating on Tuesday, saying spending to bail out debt-burdened local governments and state-owned enterprises and contain its asset crisis would hurt the world’s second-largest economy’s growth outlook.

Analysts believe the government should release more stimulus to support the economy, which is still facing headwinds.

China will continue to implement a proactive fiscal policy that will strengthen moderately, and implement a prudent monetary policy that is „flexible, moderate, precise and effective,” state media quoted the Politburo as saying.

The meeting, chaired by President Xi Jinping, also said the country would improve the stability of macroeconomic policies, the official Xinhua news agency reported.

China will „effectively improve economic potential, prevent and resolve risks, improve social expectations, consolidate and promote the positive trend of economic recovery, and continue to effectively promote quality and fair development of the economy,” Xinhua said.

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„Efforts should be made to expand domestic demand and create a virtuous cycle that mutually promotes consumption and investment. Reforms in key areas should be deepened and strong impetus should continue to be given to high-quality growth.”

In a meeting with non-Communist Party representatives on Wednesday, President Xi said the country’s economic recovery is still at a critical stage, Xinhua said in a separate statement on Friday.

Most analysts believe China’s growth is on track to meet the government’s target of 5% this year, but that compares to a COVID-weakened 2022 and performance remains uneven.

The Politburo meeting on economic work is usually a precursor to the annual agenda-setting Central Economic Work Conference, which is expected to be held in mid-December.

China’s government advisers will recommend a sustainable development target for 2024 and give more incentives to a gathering of policymakers.

„There is no doubt that fiscal policy will play an important role in 2024,” said Bruce Pang, chief economist at Jones Lang LaSalle.

Analysts at UBS expect China to set a fiscal deficit target of 3.5%-3.8% of GDP and a special local government bond allocation of 4 trillion yuan ($560 billion) in 2024, up from 3.8 trillion yuan this year.

The government has launched a number of policy measures in recent months to boost the post-pandemic economic recovery, which has been plagued by an asset crisis, local government debt risks, slower global growth and geopolitical tensions.

The central bank has offered modest interest rate cuts and pumped out more money in recent months to support growth.

In October, China unveiled plans to issue 1 trillion yuan in sovereign bonds by the end of the year, raising the 2023 budget deficit target to 3.8% of gross domestic product (GDP) from the original 3%.

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The Politburo also examined plans for anti-corruption work and reviewed regulations on party disciplinary action, Xinhua said.

($1 = 7.1625 Yuan)

Reporting by Kevin Yao and Ellen Zhang, Beijing Newsroom; Editing by Christopher Cushing, Edmund Claman and Tom Hogue

Our Standards: Thomson Reuters Trust Principles.

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