China’s leaders and economic policymakers – who have been optimistic and confident about the economy for years – are clearly spooked.
Just two weeks ago, Chinese state media was happily insisting that the country was experiencing ‘stable economic growth’.
China requires a major rethink when it comes to the economy, something which may be politically impossible for a Leninist government
Yet in the last week, Beijing has announced and is expected to approve over £319 billion in new fiscal measures – the biggest monetary policy stimulus since the pandemic. The move is a clear acknowledgement that China has a weak economy with an array of systemic economic and social problems. In another sign that Beijing is deeply concerned about the economy, these measures were introduced at the Politburo’s September forum, which normally never considers economic issues.
The measures put forward comprise interest rate and mortgage rate cuts, along with reductions in the downpayments for second homes, additional help for state enterprises to buy unsold homes, and £85 billion to allow non-bank financial firms to buy equities, and for listed firms to buy back their own shares.
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