It’s not every day that the Chinese Communist Party admits a flaw in its system. At a meeting of the party’s Politburo on Thursday, leaders including President Xi Jinping acknowledged new “problems” for the Asian giant’s economic growth.
Many analysts and investors believe that increased state aid is needed if the world’s second-largest economy is to meet its 2024 growth target of around 5%.
Unprecedented real estate crisis
China is in the grip of an unprecedented crisis in its vast real estate sector, gloomy consumer and business confidence is hurting consumption, while geopolitical tensions with Washington and the European Union threaten its foreign trade. In mid-September, the country decided to gradually raise the legal retirement age starting next year, a first in decades.
The meeting comes after Beijing announced this week a raft of measures to stimulate the economy, the biggest in years, including interest rate cuts and cheaper mortgages.
Growth without tone
“We must view the current economic situation comprehensively, objectively and calmly, face difficulties head-on and strengthen confidence” in the economy, Chinese leaders stressed, according to a report published by the Xinhua news agency.
China will “strive to meet annual targets” for the economy, the report said in what appeared to be a reference to the government’s growth target for this year. Beijing is due to release its third-quarter growth figure in mid-October.
Stimulus measures
Chinese authorities pledged Thursday to revive the country’s struggling real estate sector, after announcing new measures to boost employment this week.
China is also considering injecting nearly 130 billion euros into its state banks to revive struggling activity, which would be a first since the financial crisis of 2008, according to the economic information agency Bloomberg, which did not specify its sources.
The funding will come primarily from the issuance of new government bonds. Details have not been finalized and are subject to change, Bloomberg said.