China Implements Economic Stimulus Amid Slower Growth, Premier Criticizes Trade Barriers

China has announced a shift towards more active fiscal policies and moderately loose monetary policies to address the country’s ongoing economic slowdown. This decision follows Premier Li Qiang’s criticism of increasing trade barriers and tariffs that are seen to hinder global economic growth. In response to sluggish growth and weak consumer demand, Chinese leaders are seeking to recalibrate their approach to boost the economy, triggering positive market reactions.

Monetary and Fiscal Policy Adjustments to Support Economic Recovery
In a move aimed at reversing the economic slowdown, the Politburo, the ruling body of the Chinese Communist Party, pledged to implement more flexible fiscal measures and loosen monetary policies. This marks a notable departure from the “prudent” policies of the past 14 years, with the focus now on stimulating growth through government spending and increased credit availability. Analysts believe that these measures are designed to counter the economic shocks exacerbated by global trade uncertainties, particularly rising tariffs.

The shift to a “moderately loose” monetary stance has been welcomed by the market, as reflected in the 2.8% jump in Hong Kong’s Hang Seng index. This change is seen as a significant move to support businesses and households, boosting spending and investment.

Economic Challenges Persist Despite Policy Shifts
Despite these policy changes, China’s economy continues to underperform relative to its official growth targets. The country is struggling with a range of issues, including weaker-than-expected consumer spending, a slumping property market, and rising youth unemployment. Although the government’s stated aim is to achieve a 5% growth rate this year, recent figures show that the economy is likely to fall short of this goal.

The central government is focusing on boosting consumption through a combination of fiscal spending and easing credit conditions. However, many households are still feeling the economic pinch, particularly from low housing prices and unstable job markets. Government officials have emphasized the importance of improving the population’s sense of stability and security as part of these measures.

Li Qiang Criticizes Tariffs and Trade Barriers
Premier Li also expressed concerns over the growing trend of protectionism and trade barriers that have been increasingly imposed by countries like the United States. While not directly naming the U.S., Li highlighted the impact of rising tariffs on global growth, stating that these measures are further increasing uncertainties in the global economy. He warned that the rising use of trade restrictions is causing disruptions to global trade flows at a time when global economic growth is already weak.

Li’s comments reflect China’s ongoing frustrations with the economic policies of the U.S., particularly those targeting Chinese exports and technological advancements. As tensions rise, China continues to call for more open and unrestricted trade practices to promote global economic stability.

Ongoing Efforts to Stimulate Domestic Spending and Investment
In addition to fiscal policy changes, the Chinese government has introduced several measures to encourage consumer spending and increase investment. The central bank and regulators have taken steps to create a more conducive environment for businesses and households to increase spending, including rolling out new policies to support these sectors.

Despite these efforts, consumer inflation remains low, with November’s inflation rate reported at just 0.2%, down from 0.3% the previous month. Analysts believe this offers room for further interest rate cuts in the coming months to stimulate demand and reduce financial pressures on households.

Looking Ahead: Strengthening the Domestic Economy
Looking forward, the Chinese government is expected to continue reinforcing domestic economic activity with a combination of fiscal spending and credit measures. In addition, the government is preparing for an annual economic planning meeting later this week, where it is likely to reaffirm its policy stance for the upcoming year. The goal remains to stabilize the economy, boost domestic consumption, and address the challenges posed by external trade barriers and slow global growth.