Beijing has announced that it will increase its support for the economy, as per the decision made by the Politburo, the top decision-making body of the ruling Communist Party of China. This move will be achieved through policy tools such as banks’ reserve requirement ratios (RRR) and interest rates. The announcement was made public by state media on Tuesday.
According to official Xinhua news agency, China will continue to implement a prudent monetary policy and proactive fiscal policy. While the economy is showing signs of recovery and improvement, there are still many challenges ahead, including insufficient demand, pressures on firms, risks, and hidden dangers in key areas of the economy that need to be addressed. However, despite these challenges, China’s economic foundation remains stable with many advantages and strong resilience.
To maintain this necessary intensity of fiscal expenditure, China plans to issue ultra-long term special treasury bonds and speed up the issuance of local government special bonds. Additionally, Beijing will take steps to promote the healthy development of the capital market and deepen the implementation of local government debt-risk resolution plans. This move aims to reduce debt burden in provinces and cities.
Furthermore, China also plans to flexibly use policy tools such as interest rates and reserve requirement ratios to support real economy and reduce overall cost of social financing. It also intends to reduce housing inventories optimize policy measures for new housing while continuing reforms for small- and medium-sized financial institutions.
