Chinese leaders outline stimulus for 2023 after Covid hits expectations

When China’s leaders meet this month to set next year’s economic agenda, they are expected to outline more stimulus measures, seeking to sustain growth and alleviate disruption caused by the sudden end of strict restrictions against Covid-19, experts and analysts said. .

In three days of closed-door sessions at the Central Economic Work Conference, President Xi Jinping and other officials are expected to discuss growth targets, increased fiscal spending on infrastructure and other programs and the potential for further monetary easing.

They face a complex hurdle: China’s recent easing of strict Covid-19-related restrictions is leading to a wave of infections, compounded by inconsistent messaging and a fragile health care system.

That surge has already reached Beijing, where the start of the conference in SE has been delayed due to a sudden wave of Covid-19 infections, Bloomberg News reported on Tuesday.

The conference has no publicly announced schedule, but is expected to be held by the end of the year to establish economic policy for 2023. The meeting was expected before the end of the week.

Economists and investors, facing a lack of reliable data on the worsening pandemic situation in China and eager for clarity in the economic outlook, will this year analyze the vague pronouncements and irregular press leaks following the secret conference for clues about how the government aims to revive growth.

“We need to boost domestic demand – consumption and investment, and we need to stabilize the real estate sector,” Zong Liang, head of research at the state-owned Bank of China, told Reuters.

China’s economy, the world’s second-largest, grew just 3% in the first three quarters of the year and is expected to hover around that rate for the full year, well below the official target of “about 5.5%”.

Growth has been hurt by coronavirus-related restrictions, which have triggered frequent lockdowns and halted production, as well as squeezing consumer spending. This was on top of the persistent downturn in China’s real estate sector and the weakening of the global economy, which hurt the export sector.

The easing of restrictions has been welcomed by global markets due to the long-term economic benefits, but it carries with it the near-term prospect of an increase in infections and the impact this will have.

The central bank is likely to step up targeted support to troubled sectors through its structural tools, sources and analysts told Reuters.

Government advisers told Reuters last month they would recommend that the conference adopt 2023 growth targets ranging from 4.5% to 5.5%, while a central bank adviser said last month that China should set a target not less than 5%.