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Pedestrians pass China Evergrande Group's City Plaza development in Beijing, China. File photo: BLOOMBERG/ANDREA VERDELLI
Pedestrians pass China Evergrande Group's City Plaza development in Beijing, China. File photo: BLOOMBERG/ANDREA VERDELLI

China will aim to keep the economy expanding in a stable manner next year as it looks to counteract the effects of a housing market slump and slower growth.

“Ensuring stability is the top priority for next year’s economic work,” the Communist Party’s top decision makers said at the end of a three-day annual Central Economic Work Conference. The government will “support commercial housing markets to meet residents’ reasonable needs”, according to a report of the meeting on the official wire service Xinhua on Friday. 

The most important word for economic policy in 2022 is “stability”, Han Wenxiu, a senior economic official of the Communist Party, said Saturday.

The Chinese economy has slowed in recent months because of a worsening property market slump, weak consumption growth, and repeated outbreaks of Covid-19, which have damaged businesses and consumers’ confidence. Economists forecast growth to slow to 3.1% in the current quarter, a sharp deceleration from 7.9% in the April-June period and 4.9% in the last quarter.

“All regions and agencies must take responsibility to uphold economic stability, actively introduce policies that can help stabilise the economy, and be cautious in imposing measures that will have a contractionary effect,” Han said. 

Led by the Politburo Standing Committee, the economic conference is a precursor to next year’s parliamentary meeting, where detailed targets are disclosed. Analysts are watching closely for clues of further monetary and fiscal stimulus, and whether regulations on debt and the property market will be relaxed to help support a slowing economy.

The meeting signals that “stabilising growth is the bottom line, and for the next 12 months growth will be on top of the Communist Party’s agenda”, said Bruce Pang, head of macro-economy and strategy research at China Renaissance Securities Hong Kong. 

The statement mentioned the words “stability” or “stabilise” 25 times compared with 13 last year.


Officials reiterated the phrase that housing is for living in and not speculation, which Pang said clarifies market sentiment and “overly optimistic views” about outright easing of property policies. “I don’t think China will completely relax property policies,” he said. 

After focusing policy most of this year on curbing financial risks and reducing debt in the economy, Beijing is starting to shift its focus to supporting growth. The elite Politburo leaders earlier this month signaled a dovish tilt in property policies, while the central bank has also raised expectations of further monetary easing with its decision to cut the reserve requirement ratio for banks.

“We must acknowledge that our country’s economy faces the triple forces of contracting demand, a supply shock, and weakening expectations,” according to the statement on Xinhua.

Policy makers must control risk, stabilise the broad environment and “defuse bombs in a targeted manner”, according to the statement. They should also prevent any local governments taking on new off-balance sheet, or “hidden” debt, while also ensuring the strength of fiscal spending and speed up expenditure.

However, the statement didn’t repeat a pledge to stabilise the macro leverage ratio, or the proportion of debt-to-GDP, a sign that Beijing is shifting away from its deleveraging campaign.

Chen Long, an economist at Beijing-based consultancy Plenum, said there was also less mention of the crackdown on large technology companies, which is positive for those businesses.

“Last year was a whole paragraph about the disorderly expansion of capital and tech companies,” he said. “This year it’s briefer and there’s very little about large tech companies. That’s good news for them.”

More stories like this are available on bloomberg.com



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