A Chinese national flag flutters in the wind. According to Reuters, at a meeting led by President Xi Jinping, China’s top leadership declared plans to implement “more proactive fiscal policies” and “relaxed monetary policies” next year. It seems China will shift its monetary policy stance from “stability” to “easing” for the first time in 15 years.
According to a report from the state-run Xinhua News Agency on the 9th, the Communist Party of China, under President Xi’s leadership, held a Central Politburo meeting to outline the economic policy direction for the upcoming year. The Central Politburo meeting is an internal meeting of the Communist Party of China, attended by 24 members, including members and standing committee members of the Central Politburo.
The meeting stated, “Next year, we must implement more proactive fiscal policies and appropriately relaxed monetary policies, thoroughly prepare policy tools, and strengthen bold ‘counter-cyclical adjustment policies’.” Counter-cyclical adjustment policies refer to using monetary easing and proactive fiscal policies to counter economic downturns.
Reuters reported that China will shift its monetary policy to “easing” for the first time in 15 years. Kim Kyung-hwan, a researcher at Hana Securities Research Center, also noted, “At the Central Politburo meeting, the monetary policy stance was changed from ‘stability’ to ‘appropriately easing’ for the first time in 15 years,” and mentioned that the expression “appropriately easing” was last used in 2009-2010. The use of phrases like “more proactive” and “bold” when describing fiscal policy and counter-cyclical adjustment policies is also notable.
The Central Politburo meeting also announced policies to promote consumption and expand domestic demand through investment effects, promote the development of new qualitative productive capacity through scientific and technological innovation, and expedite the implementation of measures for economic system reform.
The Chinese authorities are likely to hold the annual Central Economic Work Conference around December 11-12 to decide on the country’s GDP target and economic policy direction for the next year, with much attention on potential policies to expand domestic demand through demand recovery.