 "Third Plenum: Big promises for Chinese economy, but are they all hollow?")
China, the world’s second-largest economy, is grappling with a property debt crisis, weakening consumption, and an ageing population.
During the Third Plenum meeting of the Communist Party in Beijing on Thursday (July 18), the country’s leaders vowed to resolve “risks” plaguing China’s economy. However, while they made big promises, no information on concrete steps to pull the country out of its financial woes was given.
Big promises
Beijing’s leaders had agreed to “prevent and resolve risks in key areas such as real estate, (and) local government debt”, State news agency Xinhua said. This week’s meeting resolved to “strengthen guidance of public opinion and effectively prevent and resolve ideological risks”, according to state media.
Top officials vowed they would “make up for market failures” and “smooth the circulation of the national economy”. They also promised to “actively expand domestic demand”, state media reported, after data this week showed retail sales rose just two per cent in June. Retail sales is a key gauge of consumption.
Beijing has said it is eyeing for five per cent growth this year. That number is the envy of many Western countries stuck in the ones and twos. However, it is a far cry from the double-digit expansion that drove the Chinese economy to for years.
No concrete moves detailed
The Third Plenum has for decades been an occasion for the party’s top leadership to unveil major economic policy shifts. However, this meeting, attended by Chinese President Xi Jinping and watched worldwide, disappointed with very few new policies being announced.
Gary Ng, a senior economist at Natixis, said the readout offered “nothing out of expectation as it just confirms existing policies.”
Hoo Tiang Boon at Nanyang Technological University in Singapore told AFP the statement “acknowledges certain risks and obstacles to the Chinese economy”.
Impact Shorts
More Shorts“It’s a sign that Beijing recognises the problems, but I’m not sure if they know what are the effective measures to address them,” he said.
Lynn Song, ING’s Chief Economist for Greater China, told AFP the readout offered some “positive signals”. But, he said, the meeting was “not a platform for pushing specific new stimulus measures”.
“While real estate was mentioned as one of the three key risks China prioritises resolving, there was no further mention of expanding affordable housing nor further specifics on efforts to stabilise the property market,” he pointed out.
With inputs from AFP
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