China’s Leaders Focus on Domestic Economy as Global Risks Rise

(Bloomberg) -- China’s top leaders pledged to expand domestic demand to boost public consumption and investment as they see “greater difficulties” ahead with the pandemic threatening the global economy.

Governments at all levels should work to make sure the services sector can return to normal operations to encourage consumption, and also push for faster construction of investment projects, Xinhua News Agency reported, citing a politburo meeting chaired by President Xi Jinping. The Wednesday meeting also called for more support for small businesses and the re-opening of shopping malls and markets.

“The Chinese economy is facing greater difficulties at the moment” as the continued spread of the coronavirus threatens global growth and adds to global instabilities, according to the report from the meeting. The current situation could continue for a long time and officials should be prepared to handle that, it said.

The statement didn’t offer any details on how it plans to boost domestic demand.

The meeting indicates there will be “more proactive fiscal support,” with the main emphasis on relief measures for the most-affected businesses and households to prevent widespread bankruptcies and job losses, Wan Qian, a China economist at Bloomberg Economics in Hong Kong, wrote in a note.

There will be more public investment funded by special central and local government bonds, and this could be worth as much as 4-5 trillion yuan ($566-708 billion) for the year, she wrote.

©2020 Bloomberg L.P.

With assistance from Bloomberg