BEIJING (AP) – Chinese leaders on Friday pledged tax cuts and support for entrepreneurs to support plummeting economic growth after a campaign to curb rising corporate debt sparked bankruptcies and payment defaults among real estate developers.
A statement released at the end of an annual planning meeting chaired by President Xi Jinping called for “maintaining stability,” reflecting concern over rising risks after economic growth slumped to a low level. unexpectedly 4.9% year on year earlier in the quarter ending September.
“The economic development of our country is facing the triple pressure of contraction in demand, supply shocks and weakening expectations,” the statement said.
The ruling Communist Party is trying to keep the world’s second-largest economy on track while forcing real estate developers and other companies to reduce debt it says is dangerously high and threatens financial stability and long-term growth .
“Policymakers are clearly concerned about the economy,” Macquarie’s Larry Hu and Xinyu Ji said in a report this week. âThe priority is to move from tightening regulations to supporting economic growth. “
China was the first major economy to rebound from the coronavirus pandemic, but that recovery quickly stabilized. The economy grew 7.9% year-on-year earlier in the second quarter of 2021, but fell after tighter limits on borrowing by real estate developers last year caused construction and sales to fall. .
The planning meeting, the Central Economic Work Conference, outlines the party’s economic agenda for the coming year. Officials typically begin announcing details at the annual meeting of the ceremonial legislature in March.
The leaders promised tax cuts and “boost support” for private companies that generate new wealth and new jobs in China, but gave no details. He said Beijing would invest in infrastructure but gave no indication of large-scale spending to stimulate the economy.
Investors are waiting to see what happens to Evergrande Group, a developer who financial analysts say is increasingly likely to default on $ 310 billion in debt. Small developers have defaulted on millions of dollars in debt or gone bankrupt.
The government has tried to assure the public and investors that the economy can be shielded from the financial fallout from Evergrande. Central bank governor Yi Gang said on Thursday that financial markets can face Evergrande, saying Beijing has ruled out a bailout.
Friday’s statement also promised more anti-monopoly and other apps that it said would “boost the confidence of market players.”
The crackdown on what regulators see as inappropriate behavior from Chinese tech giants, including Alibaba Group, the world’s largest e-commerce platform, has prompted nervous investors to cut more than 1 Trillion dollars the price of their shares abroad.
Chinese leaders say, however, that the app will allow new competitors to thrive and make the state-dominated economy more productive.
The statement gave no indication that the ruling party is slackening in its campaign to reduce debts. He repeated a party slogan, “housing is for living, not for speculation,” indicating that Beijing will try to keep a lid on prices.
The statement promised to secure supplies of coal, oil, gas and electricity after shortages led to blackouts and rationing in some major cities. Factories in major manufacturing areas have also been ordered to shut down temporarily in September to meet official energy efficiency targets.