The Politburo, a top decision-making body of the ruling Communist Party in China, announced on Tuesday that it will increase its support for the economy. This will involve using policy tools such as banks’ reserve requirement ratios (RRR) and interest rates in a flexible manner. Despite ongoing challenges, including insufficient demand, pressures on firms, and risks in key areas of the economy, the Politburo noted that China’s economic foundation is stable with many advantages and great potential.
To support the economy, China will issue ultra-long term special treasury bonds and accelerate the issuance of local government special bonds to ensure necessary levels of fiscal expenditure. The Politburo emphasized the need to use policy tools such as interest rates and reserve requirement ratios to support the real economy and lower the overall cost of social financing. Furthermore, efforts will be made to reduce housing inventories, improve policies for new housing, reform small and medium-sized financial institutions, and promote the healthy development of the capital market.
China will also work on implementing plans to resolve local government debt risks and assist in reducing the debt burden in provinces and cities. These measures are part of a broader strategy to support economic recovery and growth in the country.
