China, No Large-Scale Stimulus... Real Estate Speculation Warning Removed

Holding Politburo Meeting on the 24th to Express Determination for Demand Recovery

The Chinese Communist Party held a Politburo meeting to announce its economic policy direction for the second half of the year but did not introduce large-scale stimulus measures. Instead, it removed the warning phrases about real estate speculation that had persisted for years and indicated a commitment to boosting domestic demand and resolving local government debt.

According to China's state-run Xinhua News Agency on the 24th, the Central Politburo, the highest decision-making body led by President Xi Jinping, stated at the meeting that macro policy regulation strengthening, focus on expanding domestic demand, enhancing trust, and risk prevention are necessary for economic work in the second half of the year.

[Image source=Reuters Yonhap News]

The main focus of key projects in the second half of the year is summarized as "demand expansion." The Central Politburo emphasized, "Consumption plays a fundamental role in driving economic growth," and "We must promote consumption expansion through increasing residents' incomes and real supply through end demand." Specific policy initiatives include "activating large-scale consumption such as automobiles, electronic products, and furniture, and promoting service consumption in key areas such as sports, leisure, and cultural tourism," and "presenting core areas and measures for demand expansion." It also mentioned, "Local governments should increase the issuance and use of special bonds and prepare policies and measures to promote private investment."

Furthermore, it stressed, "Active fiscal policy and prudent monetary policy should continue to be implemented, and tax and fee reduction policies should be optimized," and "Technological innovation, the real economy, and the development of small and medium-sized enterprises should be actively supported." Regarding "key area risks," it mentioned the real estate downturn, stating, "In new circumstances where significant changes occur in supply and demand relations, real estate policies should be adjusted and optimized in a timely manner." The government was urged to support housing construction and supply, focus on the renovation of Shengzhongcun (poor migrant residential areas), social infrastructure construction, and the remodeling of idle real estate.

Notably, the warning phrase "Houses are for living in, not for speculation," which had appeared in the Central Politburo meeting statements for years, was excluded. Bloomberg News explained this as "part of efforts to calm the overheated real estate market," noting that the phrase first appeared in 2016 and had been included in the Central Politburo meeting statements every April and July since 2019. It further evaluated that "the removal of the anti-speculation slogan emphasizes the authorities' shift toward supporting the real estate market." The news agency predicted, "The increased local government debt burden due to the real estate market downturn has slowed government spending growth this year," and "the government is considering loan restructuring."

Michelle Lam, China economist at Societe Generale (SG), said, "Chinese policymakers are focusing on sustainability and are adopting a cautious approach to support short-term growth," adding, "It remains to be seen whether the new demand measures will be effective."

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