Instability Risk Tops China’s Key Economic Meeting Agenda

China’s top leadership made stability its top economic priority for next year, indicating that it will redouble efforts to support the economy as growth slows, analysts say.

At a Monday meeting led by President Xi Jinping, China’s Politburo vowed to expand domestic demand, promote the healthy development of the property industry, and strengthen technological development, according to Xinhua News Agency.

The central government’s concerns over weak investment and sluggish demand are among several issues on the agenda of China’s annual central economic work conference.

If slowdown in economic growth is worse than expected in 2022, authorities could expand monetary and fiscal policies and return to infrastructure spending.

China’s economy grew by 4.9 per cent in the third quarter of 2021 compared with a year earlier, and it is expected to slow further.

China’s economic planners are expected to switch their focus from financial discipline to gradual easing while boosting investment and consumption to fend off headwinds to growth, experts said ahead of the annual central economic work conference that may begin this week.

But analysts also warn that it would be premature to expect an abrupt end to property crackdowns and other financial speculations. Instead, a gradual easing would be designed to keep economic growth within a minimum stable range ahead of a major leadership reshuffle in October.

For the first time, a statement following the Politburo meeting used the phrase “stability is the top priority. In other words, top leaders are deeply concerned about the risk of potential instability.

Beijing has been sounding the alarm on economic risks, including a weak export outlook, possible turbulence resulting from a monetary policy shift in the United States, and changes to the global supply chain amid a geopolitical rivalry with the US-led West.

It has also called for economic and social stability prior to the key party congress next autumn when Beijing will unveil its twice-a-decade leadership reshuffle.

While Beijing is expected to focus more on supporting economic growth, some analysts say it is too soon to expect an end to tightening measures in the property market.