Beijing defined the course of economic policy for next year, disappointing investors for the absence of clear indications about the launch of new stimuli, only “promised”. The authorities, gathered for the usual annual conference of the Communist Party, defined the guidelines of the new stimulus plan, largely already announced by the Chinese authorities. Nothing new on the horizon which i markets reacted rather badlyaccumulating losses in the order of 2%.
The commitment to “vigorously” promote consumption
Leaders of the Communist Party, gathered for the annual Conference on economic policy – Central Economic Work Conference – reiterated that the “vigorous” efforts to increase consumption Interiors remain the country’s top priority.
The president Xi Jinping and the senior leaders of the Communist Party have also pledged to increase the fiscal deficit Chinese and also ad issue very long-term bonds to finance the recovery in consumption. As for the monetary policyChinese leaders confirm it will stay strongly expansiveto fight the scourge of deflation, but no precise indications have been given regarding a new rate cut and the reduction of bank reserves which – it is stated – will take place “at the right time”.
The Chinese authorities have promised to stimulate domestic demand “in all directions” and to develop other “special actions”, without however giving precise indications in this regard.
According to analysts at JP Morgan, a new one will be announced next year record deficit and the issuance of ultra-long government bonds of up to 2 trillion renminbi (around 275 billion dollars), but for now no certainty has been able to support the Chinese stock markets.
The leaders of the communist party, in this Conference, also formulated the new estimates of GDP growth and the deficit for 2025, but the numbers will only be known in March, on the occasion of the traditional report to Parliament.
The anti-Trump strategy
The focus on internal consumption has a clear strategic matrix, since the lack of internal demand by consumers and businesses has left China particularly exposed to the trend of exports. An addiction that today is considered an element of fragilityin light of the new ones duties threatened by President-elect Donald Trump.
The final report of the Annual Conference confirms that China “is facing a increasingly serious negative impact because of change in the external environment” and that “the economy still faces many difficulties and challenges.”
Chinese stock markets down in disappointment
The stock markets were certainly hoping for something more convincing from the Chinese authorities, but they have again disappointed with the bagsdue to the lack of details on future stimulus plans.
The square of Shanghai it therefore left 1.8% on the floor, while the stock market Shenzhen fell by 2% and the Hang Seng Index by Hong Kong fell by 1.9%, due tooutcome deemed “disappointing” of the two days of economic policy. It seemed to investors that the Chinese authorities had given more of a summary of the stimuli promised in the last period, rather than a real program of new aid, the extent of which is not yet known.
