Last week’s “third plenum” of China’s Communist Party may have disappointed with its lack of any plans for large-scale stimulus, but its central bank has done its little bit to support a sluggish economy with an unexpected interest rate cut.
In the lengthy statement, or “resolution” issued at the weekend that detailed the plans the party has mapped out for the next five years at its twice-a-decade third plenum, it was notable – by its absence – that the Xi Jinping-dominated leadership has no plans to implement the large-scale stimulus thatWhile there was a passing mention of the need to “refine long-term mechanisms for expanding consumption” and another to “actively expanding domestic demand” the “resolution” didn’t detail those...
Even though an increasing proportion of China’s companies are now incurring losses – there are estimates that– there isn’t the large-scale rationalisation and restructuring that would be undertaken in a western economy. At the centre of China’s current economic challenges is the continuing implosion of its property sector, where prices continue to fall and more than 20 million apartments remain incomplete after the country’s developers have fallen over like dominoes.
What the plenum did address, again broadly, was the impact of the real estate crisis on local governments.