Source: AFP
A key policy meeting watched for signals about China’s economic direction will take place in mid-July, state media said on Thursday, as policymakers try to shore up a stuttering recovery.
A full recovery in the world’s number two economy has yet to kick in more than 18 months after the end of Covid-19 lockdowns, sending waves of concern among leaders and citizens.
The Third Plenary Session, originally expected last fall, is highly anticipated in the hope that it will resolve the uncertainty and reveal details of Beijing’s future strategy.
The state-run Xinhua news agency said the meeting, to be held from July 15 to 18, “will mainly discuss issues related to further comprehensively deepening reforms and promoting Chinese modernization.”
The authorities are clear that they want to reorient the economy away from state investment and instead base growth on high-tech innovation and domestic consumption.
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However, economic uncertainty is fueling a vicious cycle that has kept consumption stubbornly low.
President Xi Jinping’s government has so far resisted any major stimulus, and China’s central bank chief warned last week that it was not on the cards.
The economy still faces many challenges, the bank chief said, but the authorities will show restraint.
Looking at reforms
Xinhua reported that the government meeting that set the dates for the Third Plenary Session had stressed the need to ensure that the reform “rests on the people and that the fruits of the reform are shared by the people.”
Among the most pressing issues facing the Chinese economy is a persistent crisis in the real estate sector, which has long served as a key driver of national growth but is now mired in debt with several top companies facing liquidation.
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Authorities have moved in recent months to ease pressure on developers and restore confidence, such as by encouraging local governments to buy unsold homes.
The Tuesday Plenary could see the introduction of policies such as “a more coordinated housing stock program to curb negative real estate leakages,” according to Yifan Hu of UBS Global Wealth Management.
Other moves may include “fiscal/tax reforms to limit risks to local government debt and further support for emerging industries,” Hu wrote in a report.
There have been some positive economic signs recently, with the International Monetary Fund revising upward its 2024 economic growth forecast to 5% last month, in line with Beijing’s official target.
However, significant obstacles remain and geopolitical tensions are also rising.
Trade tensions
Beijing hit back on Thursday after Canadian officials suggested they may become the latest Western country to impose additional tariffs on Chinese electric cars and batteries.
“Canada should respect the facts, comply with WTO rules and create a fair, impartial and predictable market environment for the joint development of the China-Canada electric vehicle industry,” said Commerce Ministry spokesman He Yadong. according to a copy. on her website.
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The European Union is preparing to impose new tariffs of up to 38 percent on Chinese EVs by July 4, which Beijing has condemned as “purely protectionist”.
The EU argues that heavy state subsidies in China have led to unfair competition in local markets, a claim denied by Beijing.
The United States raised tariffs on $18 billion worth of imports from China last month, targeting strategic sectors such as electric vehicles, batteries, steel and critical minerals, a move Beijing warned would “severely affect” relations between the two superpowers.
Chinese Premier Li Qiang called on countries to “oppose decoupling” at a World Economic Forum conference this week.
But analysts say China will eventually need to reduce its reliance on international markets to ensure a full recovery.
“For China to continue its progress, it needs to strengthen its technological and innovation capabilities and overcome the constraints imposed by Western countries,” Andrew Batson and Wei He of Gavekal Dragonomics wrote this week.
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“This requires the government to no longer simply pursue short-term growth, but to direct the allocation of resources to achieve the political goals of industrial upgrading and technological innovation.”
Source: AFP