China’s regulators have pledged to intensify efforts to stabilize the housing and equity markets. They also plan to implement more effective fiscal policies following a high-level meeting that called for increased stimulus measures. The government aims to boost the recovery of the property market.
It plans to increase demand and control the supply of land for new development. Dong Jianguo is a vice minister at the housing ministry. He spoke about this at a conference on Saturday.
The China Securities Regulatory Commission announced plans to enhance market monitoring. It will focus on futures and spot trading. It also plans to strengthen supervision of margin trading, derivatives, and quantitative trading.
The Ministry of Finance stated that it will roll out more effective and sustained fiscal policies next year. It also plans to improve macroeconomic regulations. An increase in the issuance and usage of local government special bonds is planned.
It will also expand their investment areas. These comments follow the Central Economic Work Conference in Beijing. Officials, led by President Xi Jinping, committed to raising the fiscal deficit target.
For only the second time in a decade, they prioritized “lifting consumption vigorously”. They also plan to stimulate overall domestic demand. China’s economy has shown modest recovery in recent weeks with government support.
This has boosted consumption and factory activity. However, confidence remains weak due to insufficiently strong policies to combat deflation.
Efforts to stabilize housing market
Data released on Friday showed that China’s credit expansion unexpectedly slowed in November. Loans to the real economy fell to their lowest November level since 2009. This offset high government bond issuance and dragged down overall credit growth.
More monetary easing is anticipated. The 21st Century Business Herald reported that China will cut interest rates next year. It will also cut the reserve requirement ratio.
Wang Xin is the director of the research bureau under the People’s Bank of China. He stated that the central bank will increase the intensity of monetary and credit supply. Financing conditions for the real economy are also expected to be relaxed further.
Recent statements from the Politburo have embraced a “moderately loose” monetary policy for 2025. This has led to a rush of funds into government bonds. On Friday, the yield on China’s 10-year bonds fell to a record low of 1.77%.
Stock indices, such as the CSI 300, experienced declines. The central bank also plans to better manage exchange rate expectations. It aims to protect against external shocks.
Zou Lan is the head of the monetary policy department at the People’s Bank of China. He indicated that the bank will intensify exchange rate expectation management. It will also rigorously respond to external threats to prevent risks of excessive exchange rate movements.
The yuan has depreciated significantly since mid-October. It continued to slide after reports suggested that authorities may allow further devaluation. This is in response to escalating trade tensions with the US.
