China's Communist Party Cracks Down on Officials to Revive Flagging Economy
China's Communist Party is urging officials to take action to revive the struggling economy, focusing on the real estate market and easing monetary policy.
China EconomyCommunist PartyReal Estate MarketMonetary PolicyEconomic GrowthReal Estate NewsSep 27, 2024
The Political Bureau of the party, headed by President Xi Jinping, called for stabilising the real estate market, which has emerged as the biggest black hole in recent years. The party has urged officials to take responsibility and be willing to innovate, using challenges as opportunities to grow and achieve results.
Many civil servants are reputedly reluctant to innovate and fear making mistakes, daunted by the system's centralisation, tight controls and lack of flexibility. However, a clear message has been given to officials down the line that economic recovery is now the top performance indicator on their report card.
The party's leadership is getting more anxious than before, because they know a stagnant economy will mean major political risk in the future. They have also come to realise that besides the stimulus from the central bank and the Ministry of Finance, they also need to stimulate the enthusiasm of cadres.
The meeting also underlined promoting the stabilisation of the real estate market and stopping it from further declining. Measures outlined include strictly managing new commercial housing construction, increasing loans for “white list” projects, vitalising idle land stock and adjusting housing purchase restrictions.
The political bureau meeting came a day after People's Bank of China (PBOC) Governor Pan Gongsheng announced plans to lower borrowing costs and allow banks to increase their lending. The measures announced by the governor included cutting the reserve requirement ratios (RRR) by half a percentage point, expected to free up about a trillion yuan (USD 142 billion) cash flow.
He also announced measures aimed at boosting China's nearly bankrupt property market, including cutting interest rates for existing mortgages and lowering minimum down payments on all types of homes to 15 per cent. There is a sense of urgency being shown by the party leadership to revive the property sector, which has been struggling since 2021 with a sharp downturn.
The party's efforts to revive the economy come as the US Federal Reserve has decided to lower interest rates with a bigger than usual cut. China's ruling Communist Party is taking steps to ease monetary policy and stimulate the economy, in a bid to achieve the official target of around five per cent growth rate this year.
In a bid to stimulate the economy, the party is also promoting the development of the real estate market, which is a key driver of economic growth. The party's leadership is aware that a stagnant economy will have major political implications, and is taking steps to address the issue.
The measures announced by the party's leadership are expected to have a positive impact on the economy, and help to revive the flagging growth rate. However, it remains to be seen whether the measures will be enough to achieve the official target of around five per cent growth rate this year.
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Frequently Asked Questions
What is the current state of China's economy?
China's economy is currently struggling, with a flagging growth rate and a sharp downturn in the real estate market.
What measures is the Communist Party taking to revive the economy?
The Communist Party is taking steps to ease monetary policy, stimulate the economy, and promote the development of the real estate market.
What is the significance of the real estate market in China's economy?
The real estate market is a key driver of economic growth in China, and its decline has had a major impact on the country's economy.
What is the role of the People's Bank of China (PBOC) in regulating the economy?
The PBOC is responsible for regulating the country's financial system and implementing monetary policy, and has recently announced measures to lower borrowing costs and allow banks to increase their lending.
What are the implications of a stagnant economy for China's political leadership?
A stagnant economy will have major political implications for China's leadership, and the party is taking steps to address the issue and revive the economy.
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