China Sets Goal of Boosting Consumption, Achieving Economic “Stability”

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The Chinese government established as a “top priority” to achieve “economic stability” next year and, among other goals, “boost domestic demand” through recovery and expansion of consumption.

Chinese leaders discussed at the annual Central Economic Work Conference, which ended on Friday night, the priorities for economic work in 2023, according to the state agency Xinhua, which did not announce any concrete measures but advocated “making efforts to intensify the macroeconomic and coordinate various policies to promote high-quality development.”

“We will maintain a proactive fiscal policy and a prudent monetary policy,” Xinhua said at the end of the meeting, which also stressed that “fiscal sustainability should be ensured and local government debt risks should be controllable.”

China’s leaders also seek to boost battered domestic demand by “prioritizing recovery and expansion of consumption, increasing urban and rural personal income through multiple channels, and encouraging more private capital to participate in building key national projects.”

It also called for keeping the yuan’s exchange rate “basically stable at an appropriate and balanced level,” and for “strengthening systems aimed at safeguarding financial stability to be strengthened.”

The meeting also emphasized that industrial policies should be “optimized to facilitate the transformation and upgrading of traditional industries and the development of strategic emerging industries.”

Likewise, it advocated “promoting the employment of young people, especially university students, and fighting to mitigate in a timely and effective manner the impacts of the structural increase in prices on some of the people who are in difficulty.”

China will also seek to “optimize birth support policies” and seek to “gradually postpone the legal retirement age at the right time and take the lead in dealing with the aging population and low fertility rate.”

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The leaders also discussed “accelerating the planning and construction of a new energy system, strengthening the global competitiveness of traditional industries, accelerating the research and application of innovative technologies, and vigorously developing the digital economy.”

Another point discussed at the meeting was the need to make “greater efforts to attract and use foreign capital, expand market access, promote the opening of modern service industries and grant national treatment to foreign-financed enterprises.”

Finally, the meeting also set as a goal “to improve the debt-to-assets ratio of the real estate sector” and achieve “a smooth transition of the real estate sector towards new development models”.

Beijing had set an official growth target of around 5.5% for the year, but the aforementioned real estate crisis and the harsh restrictions and confinements imposed within the framework of the ‘zero covid’ policy have weighed down activity strongly, so analysts rule out GDP growing at the pace expected by the authorities.

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