Xi Jinping's politburo is set to weigh up how to revive China's faltering economy
Zhai Jianlan/Xinhua via Getty Images
- China's top decision-making body, the Politburo, is set to meet to discuss the economy Friday.
- The country's growth has stagnated in recent months, while youth unemployment has soared.
- Beijing will announce some fiscal support – but not the "big bang" measures investors are hoping for, according to analysts.
China's top leaders are expected to discuss the economy at length Friday, with the country's much-heralded post-pandemic recovery faltering in 2023.
The Politburo, which is Beijing's top decision-making body, is set to meet at the end of what could be a make-or-break week for markets.
The group typically uses its July meeting to mull over economic policy.
That's become a crucial concern for China in recent weeks, with growth stagnating, youth unemployment soaring, and the country teetering on the brink of deflation.
Beijing is also struggling to deal with a property-market crisis that's been plaguing its economy ever since embattled developer Evergrande missed debt repayments in 2021.
Top officials like President Xi Jinping don't usually announce specific policies at Politburo meetings, but their remarks are expected to set the tone for how they'll tackle the growing list of red flags weighing on the world's second-largest economy.
China's central bank has already slashed some key interest rates in a bid to revive spending, while authorities also announced measures to boost sales of both cars and electronics Friday.
The Politburo is likely to hint at more support for property markets in major cities and lay out a path for further monetary-policy loosening – but any investors expecting a massive fiscal stimulus package are likely to be disappointed, analysts said.
"Markets don't appear to be pricing in a 'big bang' fiscal response," UBS Global Wealth Management CIO Mark Haefele said Monday in a note to clients. "We don't think this is likely, either."
"At the same time, we've seen a notable tone shift in Beijing in the run-up to the Politburo meeting on supporting the private sector, and media reports suggest some easing of mortgage restrictions may be in the works," he added.
Chinese stocks have struggled in 2023 amid signs the country's economy is faltering after nearly three years of harsh zero-COVID lockdowns.
The flagship CSI 300 is down nearly 2% year-to-date, while the Shanghai Composite is up just 2% – lagging behind the US's S&P 500 benchmark, which has soared 18% over the past seven months.
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