China Politburo Pledges Fiscal Spending And Forceful Rate Cuts

President Xi Jinping used a monthly huddle of China’s top leaders to discuss the economy and call for the government to provide sufficient fiscal spending, a rare change in agenda that underscores growing anxiety in Beijing over the nation’s slowing growth.

The 24-man Politburo vowed to complete the country’s annual economic goals, the official Xinhua News Agency reported Thursday. Officials said the government needs to ensure necessary fiscal spending and stabilize the real estate market, including strictly limiting the supply of new commercial housing construction.

It also called on the forceful implementation of cuts to interest rates and a reserve requirement ratio for banks, easing measures announced by the People’s Bank of China this week.

The decision-making body typically devotes only its April, July, and December sessions to discussions on the current economic situation. The last time such a meeting fell outside those months was March 2020, according to official readouts, when China was reeling from the outbreak of Covid-19. For the past four years, September sessions have focused mostly on party discipline or internal work.

“It is necessary to view the current economic situation in a comprehensive, objective and calm way, face up to difficulties, strengthen confidence, and earnestly enhance the sense of responsibility and urgency of doing economic work well,” the Politburo agreed, according to Xinhua.

The conclave comes two days after China’s central bank governor Pan Gongsheng unleashed his nation’s most daring policy package in decades, in a bid to revive the economy. That stimulus blitz sent China’s beleaguered markets soaring, with the CSI 300 Index — a benchmark of onshore Chinese stocks — posting its biggest gain since July 2020.

Despite that, threats to the economy remain. The years-long real estate crisis that’s wiped out an estimated $18 trillion in wealth from households has crushed appetite for spending and pushed China into its longest streak of deflation since 1999. Trade tensions with the US and Europe over claims of Chinese overcapacity are casting a cloud over the factory engine, which remains a rare bright spot.

Politburo meetings under Xi tend to take place near the end of each month. The April session typically looks at the first-quarter results, while the July huddle maps out plans for the rest of the year, and December paves the way for the Central Economic Work Meeting that crafts priorities for the following year. In 2016 and 2018, the October Politburo meeting also examined the economic situation, in addition to those three monthly sessions.