China gives top economic priority to boosting domestic demand

Top leaders, including President Xi Jinping, agreed to pursue stronger fiscal policy as well as a forceful monetary policy stance to ensure liquidity “wide” in the banking sector after concluding a meeting in which economic policy priorities for the coming year were established, state broadcaster CCTV reported on Friday. They also pledged to help private companies.

The authorities took a stronger pro-growth stance than in recent years, saying that the “amount” of economic growth is important, and that boosting domestic consumption and investment is the top priority by 2023. Officials also promised financial support for the real estate sector, which is experiencing its longest recession on record, but said they want to avoid financial speculation on housing.

The key points of the meeting are summarized below.

Increase

The expansion of domestic demand topped the list of priorities defined at the meeting. Last year, the top priority was a call to increase the “stability and efficiency” economic policy, and the previous year was the objective to strengthen scientific research and technological innovation.

Consumer spending and job growth should be placed on a “most prominent position”was defined in the meeting.

“The most important conclusion of the conference is that boosting consumption is the top priority for the Government in 2023”said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

The government will support new energy car consumption and elderly care services, CCTV said. The officials said they would ensure normal life can continue during the current spike in Covid cases and better coordinate virus control measures with economic development.

living place

Officials said they will support consumer demand for “better homes”will ensure the “stable growth” of the real estate sector and will meet the financial needs “reasonable” of real estate companies. The meeting defined that officials should reduce the financial risks of the largest real estate developers and improve their ratio between assets and liabilities.

However, they reiterated that the business model of the real estate sector must change, without giving details, and repeated the official slogan that “Housing is for living, not for speculating”a phrase used in previous years to signal efforts to make the economy less dependent on property as a source of growth.

Private sector

Officials attending the meeting said they would support platform companies to develop and create jobs, a sign Beijing wants to see China’s internet sector support an economic recovery after a crackdown in 2021.

They also said that foreign investment in China would be encouraged.

The meeting mentioned support for the private sector more prominently than in previous years, an attempt to allay fears that Beijing is increasingly putting state planning ahead of private entrepreneurship.

“We will encourage and support the growth of the private economy and private companies both with policies and in terms of social consensus. Officials at all levels should concretely help private companies deal with difficulties.”was concluded at the meeting.