China admits economy facing new ‘problems’, vows to fix property sector

A salesperson tends to items on display at a jewelry booth inside a mall in Beijing on Wednesday, September 25, 2024. – China’s top leaders, including President Xi Jinping, admitted Thursday that the economy was facing new “problems” and vowed to resolve a long-running housing sector crisis, according to state media. (Photo by WANG Zhao / Agence France-Presse)

BEIJING — China’s top leaders, including President Xi Jinping, admitted Thursday that the economy was facing new “problems” and vowed to resolve a long-running housing sector crisis, state media said.

Beijing this week unveiled a raft of new measures aimed at boosting its ailing economy, which the leadership aims to grow by five percent in 2024 – an objective analysts say is optimistic given the headwinds it is facing.

On Thursday, the ruling Communist Party convened a meeting of its top body, the Politburo, to “analyze and study the current economic situation”.

“Some new situations and problems have emerged in the current running of the economy,” the Xinhua news agency reported after the meeting, which was attended by Xi.

“We must view the current economic situation comprehensively, objectively and calmly, face difficulties squarely, (and) strengthen confidence,” it added.

READ: China considers $142 billion injection for state banks – report

Politburo members agreed on the need to “further improve the focus and effectiveness of policy measures” aimed at lifting the economy.

They also vowed to “respond to the people’s concerns” about the economic malaise.

Beijing would “adjust housing purchase restriction policies, lower interest rates on existing mortgage loans… and promote the construction of a new model for real estate development”, Xinhua said.

The meeting came the same day Bloomberg reported Beijing was considering pumping more than $140 billion into the country’s large state-run banks, in the first major capital injection of its kind since the 2008 global financial crisis.

The measure – aimed at giving the banks more room to lend to businesses – will be implemented mainly through the issuance of “new special sovereign bonds”, the report said, citing sources familiar with the matter.

The details have not yet been finalized, it added.

READ: China unveils fresh stimulus to boost ailing economy

The slew of moves announced this week, which include key rate cuts and policies intended to encourage home purchases, have been welcomed by investors as stocks in Shanghai and Hong Kong rally.

But analysts warn that more fiscal stimulus is needed to get the economy back up to full speed, as leaders continue to seek ways to achieve this year’s official growth target of five percent year-on-year.

Recent economic data has been disappointing, with second-quarter growth coming in lower than expectations at 4.7 percent.

Youth unemployment climbed in August to 18.8 percent – its highest level this year – according to official figures released last week.

This week’s stimulus measures represent a “shift towards a more aggressive easing stance, given the sustained weakness in domestic growth,” said Chaoping Zhu, global market strategist at JP Morgan Asset Management.

“The sense of urgency may convince investors that more policy support is on its way,” added Zhu.