Party journal signals Beijing sticking to policy playbook
Policy stability and predictability are the new stimulus – at least, that's what Beijing hopes.
On Wednesday, Qiushi – the Party’s flagship journal – published a commentary on “stabilizing market expectations.”
According to the piece, it is the disconnect between the macro data and how firms and households experience the economy – not the economy itself – that is dulling confidence and investment:
- “We must pay close attention to the ‘temperature gap’ between macro data and micro experience, and actively help enterprises and the public resolve difficulties so that businesses and people truly feel gains and form positive expectations.”
The remedy, per the commentary, isn't a step-change in the policy playbook, but stronger coordination, execution, and communication of what's already in place:
- “In response to concerns that the strength of policies to stabilize employment and the economy might change, authorities should respond to market concerns in a timely and effective manner, implement macro policies thoroughly and in detail, enhance their precision and effectiveness, and ensure that policy reliability and stability keep market expectations from wavering.”
Translation: The policy settings are right – we just need to make them stick.
Get smart: The economy is slowing, but as long as it remains on track to meet the annual growth target, policy stability will remain the order of the day.
- Those hoping Beijing will unleash significant new stimulus to close out the year will be disappointed.
Get smarter: You can’t “expectation-manage” your way out of a confidence slump.
- Without a pick-up in household income growth and corporate profitability – and progress on deeper structural issues – China’s animal spirits will stay locked away.