2024-10-29 06:00:00
LChinese leaders have a taste for suspense. “The measurements will be quite large this time”announced on Friday October 25, the Chinese Vice Minister of Finance, Liao Min, traveling to Washington for meetings of the International Monetary Fund and the World Bank. For weeks now, the Chinese authorities have been making it clear that a recovery plan is in preparation. If there is a decision, it could be ratified by the legislators of the Chinese Communist Party, the National People’s Congress, whose standing committee will meet from November 4 to 8. The scale of the plan is one of the unknowns.
The other uncertainty concerns the sectors of the economy that the government intends to support. The targeting of measures will be a major choice of political orientation, a choice of society. Measures that would strengthen the State, or the extremely indebted local governments that need to be bailed out, would further increase the role of Chinese public power, while extensive measures to support consumption would benefit households. Behind it, it is a question of knowing which China President Xi Jinping intends to shape. Since September, Beijing has been making announcements of economic support. This is a sign that something has changed in the perception of economic risk. Until then, the all-powerful head of the Chinese Party-State, through whom important decisions necessarily pass, seemed rather ready to take on a dose of economic slowdown.
After all, he had wanted to deflate the real estate bubble, even though the fall in this sector heavily affected households, who invested a good part of their savings there. But, in the heart of summer, property prices continued to fall, and youth unemployment rose from 13.2% in June to 17.1% in July and 18.8% in August. It was becoming increasingly clear that China would struggle to meet its target of growth of around 5% this year.
The consumer, largely absent from the plan
Since September, Mr. Xi has therefore called on all layers of the administration to do what is necessary to restore growth. The central bank mobilized by lowering its key rates and released a credit line to boost the stock market, after a real estate support plan in May, while bond issues were to help the provinces and bloodless cities.
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