Chinese government: stabilising growth a higher priority, but nothing new proposed31 July, 2012, 21:35. Posted by Zarathustra
Various media are reporting that China will step up fine-tuning to support the economy in the second half.
Chinese top leaders were meeting on the economy today according to Xinhua/Chinese government. President Hu suggested that the government will continue and improve macro policy and reiterated the need for proactive fiscal policy and stable monetary policy, and to increase support from fiscal and monetary policies on the real economy. He also suggested the need to speed up the reform of economic growth model, to ensure stable job market, and among few other things.
Meanwhile, Premier Wen Jiabao pointed out that while the economic situation is within expectation, and signs of stabilisation were seen in May and June, yet the downside risks remains enormous. On top of some of the point President Hu said, Wen also added that stabilising growth is now a even higher priority for the government, but the government will continue the regulation of the real estate market in order to prevent prices bouncing back up.
On the whole, we do not see anything new as we have heard similar things for quite a number of times by now. We believe further easing will be possible in the forms of interest rates cuts and RRR reduction. We also expect further fiscal policy in terms of tax cuts and others as have been proposed a number of times. Further proposal for investment projects at the local government level will probably be likely, although we remain sceptical if those truly massive ones (as mentioned here) would have any chance to be implemented. We also remains sceptical on whether the economy has indeed bottomed in Q2.