April 18, 2024

China’s economy: Leaders pledge more support for ‘crazy’ recovery

Hong Kong

China’s high command has vowed to do more to support a “robust” economic recovery, which lost momentum after an initial burst of activity early in the year.

The declarations, given by the 24-member Politburo of the Communist Party – the main decision-making body – boosted stocks in China-related companies on Tuesday. Shares in Chinese property developers, currently in the industry’s worst slump ever, have risen in response.

In Hong Kong, the Hang Seng Mainland Property Index was 11% higher. Shares in Country Garden, China’s biggest developer by sales last year, were more than 14% higher. Real estate firms Longfor Group and Sunac China Holdings gained more than 20% and 14% respectively.

The property rally helped Hong Kong’s benchmark Hang Seng index to trade 3% higher, after ending the previous trading session in the red. An index of the top 300 stocks traded on the Shanghai and Shenzhen stock exchanges was 2.6% higher.

According to Description released late Monday to state media, the world’s second-largest economy will make policy adjustments to stimulate domestic consumption, help private businesses and support the struggling property sector. He did not offer many details.

China’s leaders agreed that the current economic operation “faced new difficulties and challenges, mainly due to insufficient domestic demand, difficulties in operating some enterprises, many hidden risks in key areas, and a complex and severe external environment,” he said.

They told a meeting chaired by leader Xi Jinping that the current economic recovery was making “remarkable” progress.

Some investors had expected Beijing to provide more concrete stimulus measures after the country’s most senior officials met.

Stephen Innes, managing partner at SPI Asset Management, said the stronger wording of the report suggested the leadership was serious about making more decisive policy moves.

“Investors now believe that the Politburo meeting sets an encouraging tone for a more substantive and inclusive policy easing,” he wrote in a research note.

“Why is it different this time? Because lawmakers have acknowledged the problem. And to solve any problem, you have to admit that there is a problem,” Innes wrote.

Last week, official data showed that the economic recovery in China continued to lose momentum in the months of April to June, prompting urgent calls for more help from the central government.

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