Faced with weak consumer spending, persistently high youth unemployment and a tumbling stock market, China’s ruling Politburo signaled the need for stronger fiscal support and directed authorities to do more to tackle joblessness.
In a broadly worded statement issued on Thursday after its annual midyear review of the economy, China’s Communist Party leadership urged the government to pursue “more proactive” tax and spending policies, and increase employment support.
Politburo statements rarely detail specific policy measures, instead setting the broad direction for government action. Even by those standards, however, the statement offered few signs of urgency or a major policy shift, reinforcing expectations that Beijing will continue to rely on gradual stimulus rather than sweeping reforms.
The Politburo said it would “fully leverage the effectiveness of existing policies, promptly plan and introduce practical and effective incremental policies.”
China’s domestic economy has faltered and is being sustained largely by a record trade surplus and strong exports from the technology and clean energy sectors.
“The Politburo continues to rely on incremental steps to pull the economy along,” said Eswar Prasad, a Cornell University economics professor and former head of the China division at the International Monetary Fund. “But revving household consumption will require substantial direct financial assistance as well as confidence-building measures, perhaps coupled with some tax relief.”
