MNI China Press Digest Dec 19: Economic Recovery, PBOC, CEWC

Highlights from Chinese press reports on Monday:

China’s economic rebound next year depends on a recovery in aggregate demand, according to Zhu Min, former Deputy Managing Director at the International Monetary Fund. Zhu said policy should focus on restoring household consumption on second homes, vehicles, and elderly care services. Income subsidies and consumption coupons should be issued to specific resident groups as a way to expand demand, he said. Market access should be expanded to attract foreign direct investment, and China’s core-competitiveness in manufacturing should be maintained to support exports. He said the government should coordinate R&D, procurement and financing to support large scale low carbon investment. Zhu’s comments were reported in the Securities Times.

The intensity of monetary policy next year should be no less than this year’s, with sufficient liquidity to meet the needs of the real economy and maintain stable prices for funds, the Securities Times reported citing Liu Guoqiang, deputy governor of the People’s Bank of China. If necessary, the central government could increase monetary policy support in a timely manner, unless economic growth and inflation exceed expectations, Liu was cited as saying. Financial support to the real estate sector should be increased, as it is urgent to stop falling prices in this pillar industry, Liu added.

Defusing real estate market risk and boosting domestic demand are the top priorities following the Central Economic Work Conference (CEWC), according to Han Wenxiu, the Deputy Director of Central Financial and Economic Commission. The CEWC said the foundation for economic recovery remains uncertain, and that policy next year should focus on expanding demand, upgrading to a modern industrial system, supporting SOE and private firms, attracting foreign capital, and preventing major economic and financial risks. Han said the easing of Covid restrictions will lead to a "J-curve effect", with short term disruptions followed by sustained recovery into next year.