Is China’s economic course correction too late, or is it too early to tell without the specifics being ironed out?

The prime decision-making body of China’s Communist Party on Monday acknowledged a challenging macro environment and pledged to ‘strengthen countercyclical support’

But while recognising a shift in relation to property and local government debt, analysts also said more needs to be done to get the economic recovery back on track

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According to a statement released by the top decision-making body of China’s Communist Party, policymakers acknowledged a more challenging macro environment and pledged to “strengthen countercyclical support”. Photo: Xinhua

Published: 10:00am, 26 Jul 2023Updated: 10:46am, 26 Jul 2023

China’s acknowledgement of “wave-shaped” and “zigzag” economic performance and its determination to refine property, debt relief and capital market policies have raised hopes that it will introduce more proactive policies in the coming months.

While most economists ruled out so-called bazooka-like stimulus, Monday’s Politburo statement also raised questions about what policymakers will do to shore up the sputtering post-pandemic economic recovery.

According to a statement released by the prime decision-making body of China’s Communist Party, policymakers acknowledged a more challenging macro environment and pledged to “strengthen countercyclical support”.

The course-correcting assessment – though without much elaboration on the specific easing measures – came amid disappointing economic data in the second quarter, which fanned fears that China’s economic growth has lost steam.

“The highlight is a pro-growth shift in policy tone related to property and local government debt.

Larry Hu

It was the first time that “countercyclical” had been mentioned at a Politburo meeting since 2019, implying an easing bias, according to Larry Hu, chief China economist at Macquarie Group.