China's Economy Faces Three Pressures: Demand Contraction, Supply Shock, and Weakened Expectations

China's Leadership Diagnoses National Economy at Central Economic Work Conference
Next Year's Economic Direction: Progress Amid Stability... Specific Methods Proposed to Achieve Common Prosperity

[Asia Economy Beijing=Special Correspondent Jo Young-shin] The Chinese economy is facing three pressures: 'demand contraction,' 'supply shock,' and 'weakened expectations.'

State-run Xinhua News Agency reported on the 10th that the Party leadership diagnosed the Chinese economy this way at the Central Economic Work Conference, which determines next year's economic policy direction. The conference, held from the 8th to the 10th, was attended by Communist Party leaders including President Xi Jinping.

Photo by Xinhua News Agency Capture

The results of this conference can be summarized into three main points: stability, consumption (domestic demand), and livelihood (real estate).

First, the Chinese leadership decided to promote steady progress next year. To this end, they agreed to maintain an active fiscal policy and a prudent monetary policy stance in the coming year.

Regarding fiscal policy, they plan to maintain soundness while improving efficiency and accelerating the pace of expenditures. Through this, support for small and medium-sized enterprises and self-employed individuals will be strengthened.

They also decided to actively promote infrastructure investment. This appears to be a response to market criticism that this year's fiscal policy, although declared active, was not sufficiently so.

The Party leadership also plans to deepen fair competition policies to enhance the vitality of market participants. They will promote creating a fair competition environment by strengthening antitrust laws and intellectual property protection, improving the core competitiveness of manufacturing and supply chain resilience, and pursuing balanced regional development to invigorate the domestic (consumption) market.

Policies to stabilize people's livelihoods will also be supported. In particular, housing was reiterated to be for residential use, not speculation. Policies will be implemented to meet reasonable housing demand while promoting a virtuous cycle and healthy development of the real estate industry. Since housing issues are closely related to common prosperity, the Chinese leadership is expected to further strengthen regulations on real estate to stabilize housing prices.

Alongside this, Xinhua News Agency reported that the conference deeply discussed next year's economic direction focusing on livelihood areas such as employment for college graduates and youth, birthrate and aging, and public services.

In addition, Xinhua reported that the conference decided to actively promote next year policies including the three-year plan for science and technology reform, completion of the three-year practical tasks for state-owned enterprise reform, and expansion of opening-up.

The conference also mentioned specific distribution methods to achieve 'Gongtong Fuyu (共同富裕, Common Prosperity).' It explained that to achieve the goal of common prosperity, all people must unite to make the 'pie' bigger and better, and then divide the pie through appropriate institutional arrangements. The methods of dividing the pie were described as primary, secondary, and tertiary distribution. Employment corresponds to primary distribution, secondary distribution involves institutional arrangements such as regulations, and tertiary distribution refers to social roles like donations, according to Xinhua.

The Chinese leadership stated at the conference that they will support voluntary and capable enterprises and social organizations to actively participate in public welfare and charitable activities, noting that the areas of greatest concern to many people are basic public services such as education, healthcare, and elderly care.

Meanwhile, the Chinese Academy of Social Sciences forecasted China's economic growth rate next year at 5.3%. This year's growth target set by the Chinese government was 'above 6%.'

This content was produced with the assistance of AI translation services.