China to implement pro-growth measures in Q3

City in China at night

China’s economic regulatory authorities are planning to introduce a series of pro-growth measures in the third quarter of this year aimed at promoting economic growth. These measures are intended to enhance domestic demand, encourage consumption, support private investment, and ensure stability in the property sector, according to experts.

During a press conference in Beijing, Yuan Da, the director of the Department of National Economy at the National Development and Reform Commission, disclosed that the country would be examining and formulating a group of targeted and robust reserve policies as part of the pro-growth measures. These policies will be swiftly implemented as needed to reinforce counter-cyclical adjustments and strengthen macroeconomic management.

Liu Dian, an associate researcher at Fudan University’s China Institute, highlighted the importance of expanding domestic demand and fostering confidence while managing and mitigating potential risks. To achieve these objectives, Liu proposed that policymakers increase funding for public services, issue consumer vouchers, and enhance transfer payments to local governments, thereby stimulating demand, consumption, and investment.

Ye Yindan, a researcher at the Bank of China Research Institute, anticipates the rollout of a comprehensive set of stimulus policies in the third quarter. These policies will mainly focus on promoting consumption, enhancing the confidence of private businesses, and ensuring stability in the housing market.

During the same press conference, Zou Lan, the head of the monetary policy department at the People’s Bank of China, reassured the public that the central bank is prepared to introduce new policy tools as necessary as part of the pro-growth measures package. These tools will aim to provide continuous support to key areas such as inclusive finance, environmentally friendly initiatives, and low-carbon sectors.

In addition to policy tools such as adjustments to reserve requirements, open market operations, and medium-term lending facilities, Yang Haiping, a researcher at the Institute of Securities and Futures, suggested that the central bank could implement new measures to bolster consumption in critical sectors and among key consumer groups. The primary emphasis would be on facilitating the property sector’s transition to a new development model.

Li Chao, the chief economist at Zheshang Securities, projected that the central bank is likely to decrease the reserve requirement ratio in the third quarter and reduce policy rates in the fourth quarter to further support economic growth.

On the fiscal front, China intends to expedite the issuance and utilization of local government special bonds. Additionally, efforts will be made to ease the burden on enterprises, lower taxes, and reduce fees to provide support to industries facing mounting pressures.

The central bank also underlined its commitment to supporting private enterprises. During a symposium with private businesses, Pan Gongsheng, the governor of the People’s Bank of China, pledged “comprehensive efforts” to boost the private economy as part of the package of pro-growth measures. The bank will offer guidance on financial support for private real estate firms, assist local governments in addressing overdue payments to businesses, and broaden the utilization of instruments to support bond financing for private enterprises.

China’s economic regulatory authorities are proactively taking measures to stabilize and reinforce the nation’s economy amid global uncertainties. The implementation of targeted reserve policies and various stimulus and pro-growth measures in the third quarter is expected to invigorate domestic demand, encourage private investment, and promote sustainable economic growth. As the country continues to navigate challenges, the coordinated endeavors of policymakers and financial institutions will play a pivotal role in propelling economic recovery and advancement.

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