By hannover-web.com On October 8, 2023, the China News Service reported on the significant economic policies introduced by China in anticipation of the upcoming “11th” holiday. These moves underscore a robust and impactful strategy aimed at stimulating economic growth, with further measures expected.
During a rare press conference, Zheng Shanjie, Director of the National Development and Reform Commission (NDRC), was accompanied by four deputy directors to detail a comprehensive set of incremental policies. Observers noted that the lasting effects of previous measures, alongside new initiatives, clearly signal that China is actively working to reinvigorate its economy.
The phrase “beyond expectations” arose frequently in discussions about these economic policies, emphasizing the strength of the initiatives. A series of measures designed to stabilize the real estate market—including interest rate cuts, reduced mortgage rates, standardized down payment ratios, and support for real estate companies acquiring land—have been dubbed a united front aimed at reversing the downturn in housing. Market analysts are optimistic that these actions will yield positive results for both the broader economy and the real estate sector, helping to stabilize growth expectations and boost market confidence.
During the same press conference, the NDRC stressed the importance of proactive measures. This includes ensuring essential fiscal expenditures, accelerating spending, and providing enhanced support for local debt restructuring to mitigate financial risks. By lowering reserve requirements and implementing significant interest rate cuts, China’s macroeconomic policy appears focused on counter-cyclical adjustments, indicating a sustained, multifaceted push.
As policies from various sectors begin to converge, positive outcomes are starting to surface. For example, the “Two New” initiative, which targets major equipment upgrades and the replacement of outdated consumer goods, has led to substantial sales increases in key consumer sectors. Retail sales of passenger cars rose by 10.8% month-over-month in August, with electric vehicle sales soaring by 17%. Leading manufacturers are anticipating an additional 10% increase in sales for September.
Moreover, manufacturing sectors related to transportation and communications have exhibited remarkable annual growth. Shipbuilding surged by 23%, urban rail transit equipment expanded by 17.1%, and communication device production increased by 10.3% in August. Household items like washing machines, smart TVs, and refrigerators also saw robust production growth, indicating that these policy measures are effectively translating into supply-side improvements.
The market’s reaction has been telling. The recently released Purchasing Managers’ Index (PMI) for manufacturing in China is on the rise, stock markets are rebounding, and consumer spending saw a notable increase during the holiday period, all pointing to stronger market expectations.
China’s macroeconomic policy continues to focus on the organic interplay of counter-cyclical and cross-cyclical adjustments, suggesting that this series of incremental policies is designed to be sustainable rather than just a fleeting stimulus, with further room for additional measures.
For instance, the People’s Bank of China recently announced structural monetary policy tools aimed at supporting the steady development of capital markets. They explicitly stated that if the initial phases prove effective, further phases could follow, demonstrating their commitment to ongoing support.
Additionally, the NDRC plans to fast-track the release of project lists and investment plans to accelerate preliminary project work. By the month’s end, the commission aims to preallocate 100 billion yuan for major national strategy projects and another 100 billion for central budget investments, reflecting a dual emphasis on immediate action and long-term strategic planning.
As China advances with these incremental policies, officials have indicated they will expedite implementation and optimize the rollout of ready policies. The goal is to meet economic and social development targets for the year while addressing critical challenges in economic performance. This coordinated and strategic approach is anticipated to play a vital role in revitalizing the economy.
