BEIJING: As they worked on measures to stimulate the economy next year, Chinese President Xi Jinping and other senior officials said Monday that they will take a more “relaxed” approach to monetary policy.
Fears of another showdown between the superpowers are heightened by the president-elect Donald Trump’s indications that he would resume his tough trade policies during his second term in office.
According to official news agency Xinhua, the Politburo, the nation’s highest decision-making body, “held a meeting to analyze and study the economic work of 2025” on Monday.
“Next year we should… implement a more active fiscal policy and an appropriately relaxed monetary policy,” they said.
The change was the first since 2011, according to SG Markets analysts.
“The readout from the Politburo meeting… is striking all the right notes, with a few notably more dovish phrases and some unusually plainly straightforward pledges,” they noted in their note.
The change “demonstrates the government recognizes the urgency of economic challenges China faces,” according to another observer.
In addition, Zhang Zhiwei, President and Chief Economist at Pinpoint Asset Management, noted in a note that the revelation of plans to dramatically increase spending in the next year is “another positive signal”.
Having trouble getting back on track
Since September, Beijing has announced a series of policies to boost development, such as lowering borrowing rates, lifting homebuying restrictions, and relieving local governments of some of their debt.
Additionally, the central bank announced in October that it had lowered two important interest rates to all-time lows.
However, as concerns about a fresh trade war with the United States grow, analysts have cautioned that more direct fiscal stimulus focused at bolstering domestic demand is required to fully revive China’s economy.
Consumer price rise slowed last month, according to government statistics released on Monday, underscoring China’s ongoing weak spending.
According to the National Bureau of Statistics, the consumer price index, a crucial indicator of inflation, decreased from 0.3 percent in October to 0.2%.
That fell short of the 0.4 percent prediction made by analysts surveyed by Bloomberg.
Ting Lu, the Chief China Economist at Nomura, said in a note that “we expect little from the conference, despite some hyped market expectations” since this week’s sessions are meant to lay out broad strategies rather than particular measures.
“Due to the property meltdown, the fiscal crisis, and worsening tensions with the US, China’s economy is not in a normal downcycle, so it may take much more than the recent ‘bazooka’ stimulus package to truly reboot the economy,” said Ting.
‘High pressure’ crackdown
Additionally, Beijing’s leadership said that it will step up its anti-corruption campaign and advocate for a “high-pressure posture in punishing” wrongdoing.
Since taking office a little more than ten years ago, Xi has led a broad drive against official corruption, which some claim also acts as a means of eliminating political opponents.
The military has been the focus of recent attempts; this month, senior official Miao Hua joined a number of high-ranking officials who have been removed from office in less than a year.
A commitment to “strengthen the mechanism for investigating and addressing unhealthy practices and corruption” was made by officials on Monday.
According to state media, they also demanded that China “deepen integrated efforts to rectify unhealthy practices and combat corruption.”
