In order to understand what top leaders of China are thinking, one has to listen to what they say. Equally important, one has to pay attention to what they are not saying.
In the latest Politburo meeting chaired by President Xi Jinping on Wednesday, it was surprising that key words and phrases like deleveraging and housing market curbs were not mentioned at all, going by the statement released by the official Xinhua News Agency. This might be signal of a major policy shift.
The Politburo economic meeting is held every quarter. In the last eight meetings held since 2016, both deleveraging and property curbs were main topics. They’ve been viewed as the core of Beijing’s economic policy.
This time, both topics were not touched upon, as per the 959-word statement issued by the state mouthpiece.
As recently as last meeting on July 31, the top leadership still highlighted that they would unswervingly stick to deleveraging and firmly contain housing price increase.
In this week’s meeting, Xi assured that the current economic environment is stable but suggested that things may be about to change. As he talked of mounting downward pressures and companies struggling with their operations, and said risks accumulated over time may be becoming more apparent, Xi clearly acknowledges upcoming changes could be rather negative.
To counter negative forces, what are authorities planning to do?
In the statement, the Politburo used “unswervingly” for the first time to describe the policy stance on supporting the private sector. It mentioned the need to “study and tackle the difficulties faced by private and small-and-medium enterprises.” The meeting also highlighted the importance of capital market reform and the protection of interests of foreign companies in China.
These broad policy strokes are in the right direction but would take time to bear results. But if Beijing indeed eases on its deleveraging drive and scales back some of the property curbs, as hinted by the deliberate omission of such topics, it would give the economy a more instant boost.
Deleveraging efforts have made a large number of companies and individuals suffer liquidity crunch. Housing market curbs have cooled the economy, as many industries depend on the real estate sector for their well-being.
Following the hints given by the Beijing leaders about a softer policy stance, it’s no surprise that property counters and financial stocks led a strong recovery of the stock market in recent sessions.
This article appeared in the Hong Kong Economic Journal on Nov 2
Translation by Julie Zhu
[Chinese version 中文版]
– Contact us at [email protected]