lChinese leaders like suspense. “The measures will be quite large this time”announced on Friday, October 25, the Chinese Vice Minister of Finance, Liao Min, who is traveling to Washington to attend the meetings of the International Monetary Fund and the World Bank. For weeks, the Chinese authorities have been making it clear that a recovery plan is being prepared. If there is a decision, it could be ratified by Chinese Communist Party lawmakers, the National People’s Congress, whose standing committee will meet Nov. 4-8. The scale of the plan is one of the unknowns.
The other uncertainty concerns the sectors of the economy that the government intends to support. The choice of objectives will be an important choice of political orientation, a choice of society. Measures that would strengthen the state, or deeply indebted local governments that need to be rescued, would further increase the role of Chinese public power, while broad measures to support consumption would benefit households. Behind this, it is about knowing what the president of China, Xi Jinping, intends to shape. Since September, Beijing has been making announcements of economic support. This is a sign that something has changed in the perception of economic risk. Until then, the all-powerful head of the Chinese Party-State, through which important decisions necessarily pass, seemed quite willing to take on a dose of economic slowdown.
After all, he had wanted to deflate the real estate bubble, although the fall of this sector severely affected households, who invested a good part of their savings there. But in the middle of summer, real estate prices continued to fall and youth unemployment increased from 13.2% in June to 17.1% in July and 18.8% in August. It was increasingly clear that China would struggle to meet its growth target of around 5% this year.
The consumer, largely absent from the plan.
Therefore, since September, Xi has called on all levels of the administration to do what is necessary to restore growth. The central bank moved by lowering its official rates and releasing a line of credit to boost the stock market, following a real estate support plan in May, while bond issues were intended to help bloodless provinces and cities.
Until now, there was one big absence in this list of measures: the consumer. Xi Jinping periodically repeats that he considers science and technology to be the “backbone” of China’s advance, particularly against the United States. It also emphasizes industrial production, especially in the sectors of the future (new energies, batteries, semiconductors) and also underlines the importance of public service.
You have 29.38% of this article left to read. The rest is reserved for subscribers.
