Overview
- China’s top decision body met on Thursday, July 30, and ordered accelerated fiscal spending and practical incremental policies after second-quarter growth fell to 4.3%, the weakest pace in more than three years.
- Leaders said they will use monetary tools more fully and improve coordination between fiscal and financial policy to expand demand, without announcing a single large-scale ‘big-bang’ stimulus package.
- The Politburo stressed structural priorities including support for cutting-edge technology, capital-market reform, measures to stabilise the property market, and steps to shore up smaller banks and employment.
- Officials flagged limits on broad fiscal loosening because of industrial overcapacity and high local-government debt, and they vowed to “rectify ‘involution’,” meaning they will curb destructive price and capacity competition among firms.
- The announcement sets policy tone ahead of a fifth plenary session in October and suggests Beijing will try to boost growth mainly by speeding up already planned spending and targeted supply-side fixes rather than by expanding welfare or large income-led stimulus.