Central Financial Work Conference was a dud

Chinese policymakers don't appear to have any breakthrough ideas to address the country's financial challenges in the years ahead.

• That was the message we took from the readout of the Central Financial Work Conference, which concluded on Tuesday in Beijing.

Some context: The meeting, overseen by Xi Jinping, is typically held every five years and sets the overarching strategy for the financial sector for the years ahead.

• The last meeting, held in 2017, kicked off an impressive five years of financial de-risking.

This year, we were looking for any signs that officials have a new gameplan to address:

• Local government debt challenges
• The property market malaise

Instead, the readout mainly went over well-trod ground, laying out a list of financial sector policies that have long been in focus, like:

• Improved corporate governance
• Better regulatory oversight
• Financial sector opening

The brief mentions of local debt and property included these phrases:

• “We will establish a long-term mechanism to prevent and resolve local debt risks."
• “We will improve...capital supervision of real estate enterprises...and meet the reasonable financing needs of real estate enterprises of different ownership types.”

Our take: The readout of this meeting was particularly disappointing, and we expect the market will largely ignore it.

• That said, it is somewhat encouraging that officials explicitly mentioned the need for a long-term mechanism to address local government debt – and we continue to expect more details on this front to be forthcoming in the months ahead.
• Meanwhile, on property, it appears officials will offer more financial support to developers – but a fundamental fix for the sector remains elusive.