China's economy in focus ahead of key July political meeting
by AFP Staff Writers
Beijing (AFP) June 27, 2024

China will hold a key political meeting historically watched for signals on economic direction in mid-July, state media reported Thursday, as policymakers seek to shore up the country's stuttering recovery.

A year and a half after crippling Covid-19 restrictions ended, a full rebound in the world's number two economy has yet to kick in, sending ripples of unease through leaders and citizens.

The Third Plenum, originally expected last autumn, is highly anticipated in the hope it will resolve uncertainty and reveal details of Beijing's strategy going forward.

Announcing its dates of July 15-18, state news agency Xinhua said the meeting would "primarily examine issues related to further comprehensively deepening reform and advancing Chinese modernisation".

Authorities have been clear they want to re-orientate the economy away from state-funded investment, and instead base growth around high-tech innovation and domestic consumption.

But economic uncertainty is fuelling a vicious cycle that has kept the latter stubbornly low.

So far, President Xi Jinping's government has resisted any big stimulus, and last week the head of China's central bank warned that was not on the cards.

The economy still faced many challenges, he said, but authorities would exercise moderation.

Among the most urgent issues is a persistent crisis in the property sector, which long served as a key engine for national growth but is now mired in debt, with several top firms facing liquidation.

Authorities have made moves in recent months to ease pressure on developers and restore confidence, such as by encouraging local governments to buy up unsold homes.

There have seen some positive signs recently, with the International Monetary Fund last month revising upwards its 2024 economic growth forecast to five percent, in line with Beijing's official target.

But significant hurdles remain, while geopolitical tensions with Western countries are also mounting.

The European Union is preparing to impose new tariffs of up to 38 percent on Chinese electric vehicles by July 4, a move that Beijing has condemned as "purely protectionist".

The EU maintains that heavy state subsidies in China have led to unfair competition in local markets -- a claim denied by Beijing.

The United States hiked tariffs last month on $18 billion worth of imports from China, targeting strategic sectors such as electric vehicles, batteries, steel and critical minerals, a move Beijing warned would "severely affect" relations between the two superpowers.

Earlier this week at a World Economic Forum conference, Chinese Premier Li Qiang called on countries to "oppose decoupling".

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