China's top leaders said they would focus on boosting the economy next year, while possibly scaling back fiscal stimuli.
Three years of strict Covid Zero restrictions, a crackdown on financial risk in the property market, and targeting excessive growth of internet platform companies seem to have loosened the reins of the president.
At a two-day Central Economic Work Conference that wrapped up on Friday, senior officials pledged to revive consumption and support the private sector in a marked shift from the past.
Industrial output has been weakened.
The National Bureau of Statistics is the source of this information.
According to economists, the focus next year is likely to be on boosting gross domestic product, with policymakers likely to aim for growth of 5% or higher.
China is facing a surge in Covid infections in coming months after virus controls were hastily abandoned and consumer and business confidence are near record lows.
Here is a look at the key findings from the Central Economic Work Conference and what they mean for the future.
Favorable policy will be implemented to encourage private enterprises to grow and broaden market access for foreign firms, according to officials. The officials said they would support the companies in creating jobs and competing in the international market.
During last year's meeting, leaders emphasized supervision of the industry and curbed its "wild growth." This year, the language on platform companies was more positive.
The biggest change this year seems to be the increased focus on improving the business environment for foreign and private companies. Investment in light manufacturing and the service sector could be boosted by that.
The officials took a more pro-growth stance at the meeting than in the past. Expanding domestic demand was the top priority.
Consumer spending and employment growth should be given a more prominent position. They said that the income of urban and rural residents would be increased through multiple channels.
Consumer spending has been a weak spot for the economy during the Pandemic and economists expect a rebound next year. It is likely that growth will go to 5% or above next year.
A GDP growth target of around 5% is being considered by senior officials, according to a report. The economy needs growth of at least that amount in coming years to meet China's longer-term ambitions, according to several government officials.
During last year's meeting, officials highlighted phrases such as "front-loading" infrastructure investment and "new tax cuts", which were not included in this year's meeting.
The focus of fiscal policy will remain to support growth, while also promising to maintain a necessary magnitude of public spending and keep local government debt risks in check.
We think this means a continued proactive fiscal policy but likely with a smaller additional fiscalStimulus than 2022.
China's budget deficit soared to all-time highs this year and local government debt burdens have become unsustainable because of sliding tax and land revenue. The central government increased transfer payments to local governments in order to increase revenue.
Infrastructure investment is expected to grow less in the next year than it did in the previous year. They expect the fiscal deficit to rise by less than half a percentage point of GDP, which would be less than this year's increase of more than 3.5 percentage points.
Monetary policy may remain loose due to the government's desire to expand domestic demand and the economic recovery being fragile.
There could be more monetary easing and a push to get banks to lend to small businesses. The officials said that they would aim to expand credit at a similar pace to GDP growth.
The deputy governor of the People's Bank of China made comments over the weekend that seemed to confirm that stance. According to a report in the local media, he said the magnitude of monetary policy would not be smaller than this year.
In previous years, the slogan "housing is for living, not for speculation" was used to signal efforts to make the economy less dependent on property as a source of growth.
There were signs of a change of tone, with officials promising to support consumer demand for better housing, ensure stable growth in the sector and meet the financing needs of property companies.
The stance around the property market has shifted to support and care-taking, according to Citic Securities Co.
The government is determined to put a floor to the property market slump. olicies will probably be loosened further until the market shows signs of stabilization and recovery.
Senior officials used to talk about the property market in a different way. The property market is a pillar of the economy and new measures are being considered to improve the financial condition of the sector and boost confidence, according to the vice premier.
John, Fran, Tom, and Yujing were involved in the project.
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