🌏✨ In a significant move to bolster its economic growth, the Political Bureau of the CPC Central Committee has pivoted China's strategy towards enhancing consumer spending for 2024.
Following the IMF's optimistic projection of a 5% GDP growth, the Political Bureau adopted a more cautious yet realistic approach during their recent meeting. This strategy aims to address ongoing economic challenges by implementing essential reforms, which have been warmly received by investors and the business community.
Held shortly after the Party's third plenary session, the meeting outlined both short- and medium-term goals, emphasizing support for the private sector and efforts to rebuild investor confidence. This shift underscores the gravity of China's current economic situation, characterized by growing negative pressure from international markets and weak domestic demand.
The national economy saw a 4.7% year-on-year growth in the second quarter, slightly below the first quarter's 5.3%. To rebalance an economy heavily reliant on construction and export manufacturing, swift and extensive decisions were necessary.
Traditionally, China's focus on advanced technologies like electric vehicles and renewable energy has positioned it as a leader in high-tech industries. However, intense competition among local companies has driven prices below cost, resulting in decreased profits and numerous business failures.
In a notable shift from previous strategies centered on property and infrastructure investment, the latest policy now prioritizes household consumption. According to Xinhua, the meeting highlighted the need to expand domestic demand with a focus on boosting consumption.
China's longstanding economic model, which leaned heavily on real estate and infrastructure, has accumulated substantial debt over the past 15 years. Analysts warn that increasing debt could lead to prolonged low growth and deflation risks. To mitigate this, the government plans to gradually shift resources from the public sector to households, aiming to create a more balanced and sustainable economic environment.
