The Chinese Communist Party (CCP) regime has signalled a return to stimulus measures because of sharply decelerating growth and potential social unrest. A CCP Politburo meeting last week called for stable growth to be the top priority.
“The ongoing pace of economic growth is within expectations, but the external environment remains grim and poses difficulties and challenges,” the official Xinhua news agency reported the Politburo discussions as stating.
The Politburo reiterated the need for “prudent” monetary and “proactive” fiscal policies. In other words, Beijing will try to stem a six-quarter slowdown in the world’s second largest economy by boosting bank credit and implementing further stimulus measures.
Underscoring the worsening economic situation, Premier Wen Jiabao told a meeting of business leaders and academics in late July: “We must see with a clear mind that there are difficulties and risks in the current economic situation that can’t be underestimated.”