Chinese President Xi Jinping will be attending the opening session of the National Congress (NPC) held at the Beijing People’s Conference, March 5, 2025.
Florence Law | Reuters
BEIJING – China will support businesses struggling with targeted measures in the face of a “increasing external shock” as China’s President Xi Jinping will be chairing on Friday, according to reading of the meeting.
The Politics Bureau meeting, China’s second-strongest political group, comes as tensions between Washington and Beijing escalated this month with more than 100% new tart tariffs. Large Wall Street banks have thus cut China’s GDP forecast annually, but the country is still striving to achieve its lofty target of around 5% growth set in March.
According to a Chinese readout translated by CNBC, authorities have called for “several measures to support difficult companies,” including financial support.
Politbulo also sought “timely reductions” in interest rates and a reserve requirement ratio.
Zong Liang, chief researcher at the Bank of China, said policymakers have been sticking to their stance from the beginning of this year, showing flexibility in targeting measures earlier this year. To mitigate the impact of tariffs, he hopes China will do more research on certain businesses and consider ways to support them.
In a rare move, China raised its deficit target to 4% of GDP in March. Finance Minister Lan Fount showed at the time that China had room for action on fiscal policy.
Since the escalation of US trade tensions this month, local Chinese government and major companies have announced efforts to help exporters redirect their products to the domestic market for sale.
Politburo Meeting Readout highlighted the need to increase incomes in the middle and low-income groups and promote the consumption of services. Leaders also called for further technology development, including the integration of artificial intelligence.
“The press release shows that the government is ready to launch new policies when the economy is affected by external shocks,” said Zhiwei Zhang, president and chief economist at PinPoint Asset Management, in a memo.
“It appears Beijing is not in a hurry to start a big stimulus at this stage,” he said. “It takes time to monitor and evaluate the timing and size of a trade shock.”
Policy adjustments
The CSI 300 fell temporarily, and after the conference’s statement was issued, Hong Kong’s Hangsen index trimmed the gain.
Chinese politics, made up of high-level members of China’s dominant Communist Party, tends to lay out a wide range of policy directions.
Bruce Pang, assistant associate professor at Cuhk Business School, said the latest conference reaffirmed policies from top executive bodies – government ministries, and that government ministries “emphasize high levels of commitment and collaboration.”
“While they may not offer unexpected groundbreaking surprises, these measures provide policymakers with tools to navigate external uncertainty,” he said, adding that he is looking forward to future private sector legislation to further improve the business environment.
The National People’s Assembly, the standing committee of China’s parliament, will meet Sunday through Wednesday to review new laws supporting the private sector.
Weekly analysis and insights from Asia’s biggest economy in your inbox
Subscribe now
Source link
