The meeting called for “reasonable” economic expansion, redoubled efforts to support innovation and technological development to put supply chains on a stronger footing in the face of US-led efforts to de-risk from China and curb its access to advanced technology.
The report also highlighted the importance of “establishing the new before abolishing the old”, which generally means a step-by-step approach to developing the economy rather than rushed campaigns.
“When dealing with different risks, Beijing needs to draw up new rules in advance before it breaks the old ones. Otherwise, the public will be confused without new rules when the old ones are removed. This could breed even greater risk,” said Ding Shuang, chief economist with Greater China at Standard Chartered.
Fu Weigang, executive director of the Shanghai Institute of Finance and Law, said fleeing foreign investment and low expectations among people and businesses are the main “sore points”.
“The key to solving these are specific, case-by-case measures that we must have for next year,” Fu said.
The December meeting of the 24-member Politburo often precedes the annual economic work conference, which is expected to start next week and should provide details of Beijing’s policy priorities for next year.
China is widely expected to hit its 5 per cent growth target for this year thanks to a low comparison base from last year, but there is global concern about whether it can maintain strong growth in the coming years.
Beijing is also struggling to revive consumption demand and maintain investor confidence, especially from private and foreign companies.
The Politburo meeting pledged to maintain a proactive fiscal policy and flexible monetary policy to support growth, reinforcing expectations that the authorities will fine-tune economic-support policies but refrain from a massive stimulus next year.
“China is likely to maintain an expansionary policy next year. Liquidity will also remain relaxed next year,” said Ding.
Beijing already approved the sale of 1 trillion yuan (US$140 billion) of special treasury bonds in October to prop up economic growth. It lifted this year’s fiscal deficit ratio to around 3.8 per cent of the national GDP, much higher than the previous red line of 3 per cent.
“Even though there will be no large-scale stimulus measures, fiscal policy will remain expansionary, this fiscal expansion is at least not smaller than this year,” Ding said.
The authorities also highlighted the importance of “countercyclical” and “inter-cyclical adjustment” of macroeconomic policies, two terms often associated with efforts to stabilise the economy.
“This may imply Beijing is aware that investment growth is weak, especially for the private economy,” said Zhu Tian, a professor of economics at the China Europe International Business School in Shanghai.
“So Beijing in the new year may use some consumption-boosting policies to create more demand and help private businesses to invest more.”
On Wednesday, during a meeting with non-party figures, Xi said the country’s economic recovery is at a “key stage”.
Xi specifically asked the All-China Federation of Industry and Commerce, a Beijing-based semi-official organisation representing the private sector, to help implement supportive policies and let private businesses play a bigger role in national development.
The market has been closely monitoring Politburo meetings in recent months for clues about personnel changes and the date of the third plenum.
The decision-making body usually meets once a month, but it also normally holds a study session towards the end of the year, where Xi would be expected to deliver a key speech on the next year’s political priorities.
“The [Politburo] statement aims to repair the loss of confidence in China, which is the core of many economic problems. The government has shown a willingness to retain exports and foreign investment,” said Gary Ng, senior economist for Asia-Pacific thematic research at Natixis.
“Domestically, it is about stabilising the sentiment of consumers, firms and investors with reasonable expansion in fiscal and monetary policy. However, the implementation remains unclear as usual,” he said.
Fu added the recent decision to allow citizens of six countries visa-free access for a year had helped boost travel and confidence among foreign businesses.
“We need no empty promises but more concrete and specific measures like this in 2024 for the benefits to multiply and turn the corner on the economy.”
Additional reporting by Miyasha Nunimaimaiti