China’s top economic planner said on Tuesday that authorities were “fully confident” the country would meet its economic growth targets for this year, after announcing a series of stimulus measures last month that sent stock markets soaring.
Beijing has struggled to revive business activity as officials target growth of around five percent, which analysts say is optimistic given numerous headwinds, from a prolonged housing crisis to sluggish consumption and local government debt.
All eyes will be on a press conference on Tuesday led by Zheng Shanjie, head of China’s National Development and Reform Commission (NDRC), with investors hoping Beijing will unveil more economy-boosting policies.
“We have full confidence in achieving the economic and social development goals for this year,” the top economic planner said.
“We are also confident that we can maintain stable, healthy and sustainable development,” he added.
Shares in mainland China rose more than 10 percent on Tuesday as traders resumed their blistering rally after a week’s hiatus on hopes of more action from Beijing. That meant an increase of more than 20 percent in the run-up to Golden Week.
Investors have been rushing back into stocks on the mainland and in Hong Kong since authorities began announcing a series of stimulus measures to reverse a long period of tepid economic growth.
Many of the measures unveiled so far target the weak housing market, long a key driver of growth but now mired in a protracted debt crisis, illustrated by the fate of developers like Evergrande.
To that end, Beijing’s central bank has cut interest rates on one-year loans to financial institutions, lowered the amount of cash lenders must keep on hand and lowered interest rates on existing mortgages.
Several cities – including the financial melting pots of Shanghai, Guangzhou and Shenzhen – have also further relaxed restrictions on home buying.
“Looking at the current development and the development forecast, the fundamentals of our country’s economic development have not changed overall,” Zheng said on Tuesday.
“With the continued introduction of various policy measures, especially incremental packages, market expectations have improved significantly in recent times,” he added.
Analysts hope officials will unveil further fiscal support measures, such as trillions of yuan in bond issuance and policies to boost consumption.
But they warn that deep reforms to the economic system to ease the debt crisis in the real estate sector and stimulate domestic demand are needed if Beijing is serious about solving the fundamental obstacles to growth.
“China’s economy is not in crisis and (Beijing) does not need to announce a major budget package for the rest of 2024 to help China meet its GDP target,” said Shehzad Qazi of China Beige Book.
“The real question is whether Beijing will announce a multi-phase spending program for 2025 and beyond, which will also address the structural problems holding back the economy’s transition to a consumption-driven economy,” he added.
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