Last week, Chinese leaders in the 24-member Politburo discussed economic measures for the H2 of 2023. The statement that followed contained stronger l
Last week, Chinese leaders in the 24-member Politburo discussed economic measures for the H2 of 2023. The statement that followed contained stronger language on stimulus measures than expected which helped improve the sentiment, although it didn’t last for long. They emphasized the need to implement countercyclical measures with precision and force after the failure of the economy to rebound properly following the prolonged coronavirus lockdowns and also called for the availability of more policy options. The primary focus was on actively expanding demand within the country, in order to boost economic growth.
The government aims to enhance the fundamental role of consumption in driving economic growth, which they have been trying to keep low for so long. The areas where they plan to intervene are in major items such as automobiles, electronic products, and household items, as well as spending on services like sports, leisure, culture, and tourism services will be encouraged.
The real estate sector also received attention with policies to optimize it as soon as possible, specified for each city to help residents demand for housing. The main goal is to promote stable and sound development in the real estate market.
Government investments will have a bigger role in driving overall investment with faster issuance and utilization of local government bonds. They will also implement more policies that will spur private investment in various sectors, as well as multiple measures to maintain stability in the country’s foreign trade and investments. One specific measure mentioned is increasing the number of international flights.
Although after the initial optimism, markets grew weary of the promises and adopted an approach of wait and see, asking for facts before running away with anything. As a result, commodity dollars such as the AUD. NZD and the CAD remained bearish for most of the week. So, today’s data was important, showing where the Chinese economy is heading.
June Manufacturing and Services PMI Data from China
www.fxleaders.com