China signals big shift in economic course due to US trade war headwinds

China’s ruling Communist Party sent a strong message on Wednesday that it will significantly alter its economic policy course to respond to growing economic headwinds resulting from the trade war with the United States.

The shift was signalled in a statement after a meeting of the Politburo, the party’s top policymaking body, which analysts agreed marked an important change in tone compared to three months ago.

Past Politburo statements emphasised the “three battles” – of financial risk control, poverty alleviation and pollution curbs – that formed the core elements of President Xi Jinping’s economic plan. Reducing debt and excess industrial capacity were also top priorities. But these concerns were not mentioned in the most recent statement.

Instead, it indicated that the immediate economic threat posed by the US trade war was forcing a mid-course correction in economic policy.

Wednesday’s statement expressed concerns about “growing downward pressure” on the economy from a hostile international environment and noted “many difficulties with certain enterprises and the emergence of risks accumulated over long periods of time”.

“We need to attach great importance to this situation and be more forward-looking to respond in a timely manner,” it said.