The economic policy agenda shapes up
Chinese economic officials are set to moderately expand fiscal spending in 2024.
- That’s the key takeaway from the Politburo meeting that took place on Friday.
- The other takeaway is that monetary policy has limited room to further support the economy next year.
Some context: The Politburo regularly holds an economy-focused meeting in early December in preparation for the Party’s Central Economic Work Conference (CEWC) in mid-December.
- We expect this year’s CEWC to take place late next week.
- This is when officials will make key decisions on the economic policy approach for next year – so we should get more details about key policy settings soon.
That said, this year, economic officials had another opportunity to nail down their policy priorities at the quinquennial Central Financial Work Conference (CFWC) that took place in late October.
Since that meeting, policymakers have been hammering away at an updated economic agenda, which includes:
- Further consolidating the economic recovery – while emphasizing that officials are broadly comfortable with the current trajectory
- Continuing to boost fiscal policy support in the year ahead
- Shifting the central bank’s focus from monetary policy moves to credit policy and bank window guidance
- Focusing in on addressing local government debt risks
- Pushing forward the “three major projects” to stabilize property sector activity
- Reducing financial risk – particularly at smaller banking institutions
This priority list has been consistently reiterated by top economic officials in recent weeks, so we expect the CEWC to once again tout these themes.
What to watch: The economic agenda for 2024 is largely set – the key question is just how much fiscal firepower officials are willing to offer.