Highlights
Chinese state media have released details of a meeting held by senior leadership Monday to assess current economic conditions and set policy for the rest of the year. Officials expressed reservations about the strength of economic recovery but provided little indication that a major shift in policy settings is imminent, broadly in line with recent comments from the People's Bank of China.
The report notes that officials consider the current economic recovery to be"good" but also"wave-like" and"tortuous", indicating that they acknowledge that recent data have shown a moderation in conditions after improvement early in the year. They cited a number of"difficulties and challenges" facing the economy, including insufficient domestic demand and a"severe" external environment.
Officials identified a number of priorities of the rest of the year, some very general in nature, but others more specific. Among the specific priorities mentioned were the need to focus on expanding domestic demand and boost confidence. In particular, officials are looking to increase consumer spending on automobiles and other goods and services by supporting the growth of middle-income households.
Reflecting ongoing concern about China's property market, the report states that officials highlighted that this is a key risk. Officials identified several measures that should be taken to mitigate this risk, including steps to address local government debt and tighten the supervision of small and medium-sized financial institutions.
Policy stability was also highlighted as an objective. Officials reaffirmed their commitment to maintaining an"active" fiscal policy and a"prudent" monetary policy. They also advised that they will continue to target a stable exchange rate at a"reasonable and balanced" level. These comments suggest that despite their concerns about the pace of recovery, officials do not currently envisage a need for a major shift in policy settings.
The report notes that officials consider the current economic recovery to be"good" but also"wave-like" and"tortuous", indicating that they acknowledge that recent data have shown a moderation in conditions after improvement early in the year. They cited a number of"difficulties and challenges" facing the economy, including insufficient domestic demand and a"severe" external environment.
Officials identified a number of priorities of the rest of the year, some very general in nature, but others more specific. Among the specific priorities mentioned were the need to focus on expanding domestic demand and boost confidence. In particular, officials are looking to increase consumer spending on automobiles and other goods and services by supporting the growth of middle-income households.
Reflecting ongoing concern about China's property market, the report states that officials highlighted that this is a key risk. Officials identified several measures that should be taken to mitigate this risk, including steps to address local government debt and tighten the supervision of small and medium-sized financial institutions.
Policy stability was also highlighted as an objective. Officials reaffirmed their commitment to maintaining an"active" fiscal policy and a"prudent" monetary policy. They also advised that they will continue to target a stable exchange rate at a"reasonable and balanced" level. These comments suggest that despite their concerns about the pace of recovery, officials do not currently envisage a need for a major shift in policy settings.
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