Chinese leaders have pledged to address the decline in the housing market and stimulate growth in response to concerns that the central bank’s recent measures may not be sufficient. The politburo aims to maintain a 5% economic growth target by increasing benefits for the poorest and empowering local authorities to prevent further drops in house prices. Plans include offering monthly allowances for households with multiple children and providing local governments with additional funding to intervene in real estate markets.
Additionally, China is considering injecting capital into state banks to enhance their lending capacity. This shift in approach follows a series of disappointing economic data and concerns that the growth target may be in jeopardy due to reliance on fluctuating property values and exports. Recent interventions by the People’s Bank of China, including interest rate cuts and easing lending rules, have resulted in positive market reactions.
The proposed strategies signal a departure from previous fragmented policies towards a more coordinated approach. Economist Bruce Pang views the endorsement of stimulus measures as a strategic shift towards driving economic recovery and restoring business confidence. Despite facing criticism from economic advisers, Chinese President Xi Jinping appears committed to implementing comprehensive measures to revitalize the economy.
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