World China indicates no stimulus coming; government to maintain 'zero-COVID'...

China indicates no stimulus coming; government to maintain ‘zero-COVID’ policies

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July 28 (BP) — China’s leadership on Thursday did not signal that new stimulus for economic growth was on the way as it presented a negative assessment of economic growth.

The Communist Party’s top decision-making body, known as the Politburo, said China should aim to achieve “the best outcome” possible for economic growth while maintaining its strict “zero-COVID” policies, in the meeting headed by Chinese President Xi Jinping.

During the meeting, the leaders did not mention national economic goals that were brought up during its April meeting, signaling that the government sought to downplay the previous target of “around 5.5%” growth for 2022.

Wang Jun, a director at the China Chief Economist Forum, also told CNBC that while he expected continued use of credit and local government bonds to support the economy, he did not expect authorities to “force” 5.5% growth.

Despite the possibly lessened expectations for the national economy, well-performing provinces were encouraged to work to meet their individual goals.

“This statement gives leeway for missing the annual growth target as the Politburo sticks to its long-term priorities and refrains from using aggressive stimulus,” Peiqian Liu, chief China economist at NatWest Group Plc., told Bloomberg.

China’s leaders did not signal any changes to the country’s “dynamic zero-COVID” policy, which saw parts of Shanghai locked down as recently as last month amid an outbreak of the virus.

“Regarding the relationship between pandemic control and the development of the economy and society [we must] … take the long view, especially from a political point of view, calculate the political cost,” a readout of the meeting said.

The leaders also placed a focus on the real-estate market, reiterating that “housing is for living in, not for speculation” amid a potential property crisis as hundreds of thousands of homebuyers refused to pay mortgagees on apartments that saw construction stall.

Local governments were encouraged to take a localized approach to support home buying with different policies implemented in different cities.

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