BANGKOK (AP) — Chinese leaders have wrapped up a two-day annual meeting to set economic priorities for the coming year, the official Xinhua News Agency said in a report Tuesday that cited a litany of problems but also said the world’s second-largest economy had “achieved a recovery.”
The report gave no details of specific policy changes but laid out broad goals that are in line with what the ruling Communist Party has been doing as it endeavors to steer the world’s second-largest economy toward more sustainable, stable growth as China recovers from the setbacks of the COVID-19 pandemic.
The property industry is in crisis. Prices have been falling for months, suggesting weak overall demand both inside China and in global markets. Youth unemployment is precariously high and local government debts are adding to pressures on the financial system.
The Xinhua report said China was contending with slack demand, excess industrial capacity, weak consumer confidence and “certain risks and hidden problems” — and a world that has grown increasingly “complex, severe and uncertain.”
“China still has to overcome some difficulties and challenges to further revive the economy,” it said. “It is important to be more mindful of potential dangers and to effectively respond to and solve these problems,”
But it also called for greater confidence, saying that “favorable conditions outweigh unfavorable factors.”
The annual economic work conference is usually held in mid-December. It followed a meeting of top party leaders last week where Xinhua reported that Xi had described 2024 as a “crucial year” for attaining goals laid out in the party’s five-year plan through 2025.
Reports on both meetings suggest officials are seeking greater consistency in carrying out policies. That hints at concerns over moves in recent years that have at times caused major disruptions, such as strict and disruptive anti-COVID 19 policies that Beijing abruptly abandoned late last year.
Tuesday’s report said the meeting had called for maintaining stability and for establishing “the new before abolishing the old,” a phrase analysts said suggested greater caution and a more gradual approach.
Policy swings such as the decision late last year to abruptly drop the anti-virus controls, and uncertainty over regulatory changes have also unnerved foreign companies operating in China and appear to be deterring foreign investment, which has fallen sharply in recent months.
The economy has been slowing from its past double-digit growth for years and is forecast to have expanded at about a 5% annual pace this year, in line with the government’s target. Most estimates suggest it will slow further next year.
Last week, Moody’s Investor Service downgraded China’s sovereign debt rating as the country’s real estate crisis seeps into local governments and private financing. It also downgraded ratings for some major Chinese banks and insurance companies.
China has tipped into deflation in recent months, another sign of weakness.
Wholesale, or producer prices, have fallen year-on-year for all of 2023, dipping to a low of minus 5.4% in June. Consumer price inflation has hovered near 0% or below in annual terms since April.
The property sector, a major source of demand for any major economy, has stalled with dozens of developers defaulting on their debts and struggling to finish apartments they promised to deliver.
In response, the government has eased borrowing rules and cut mortgage rates for first-time home buyers while providing some tax relief measures for small businesses. Late last month, it announced plans to issue 1 trillion yuan ($330 billion) in bonds for infrastructure projects and disaster prevention, dipping deeper into deficit to try to nudge the economy into higher gear.
The weak housing market is among trends that have sapped enthusiasm for spending, hindering progress toward increasing domestic demand to help drive growth. Another is the high rate of unemployment among young Chinese, which was at about 20% as of June. That is the latest figure available after the government suspended its monthly reporting on that measure.
The Xinhua report said leaders had resolved to do everything possible to “secure people’s livelihoods and improve their well-being” and to emphasize stable employment.
OTTAWA – Finance Minister Chrystia Freeland says the government is making some changes to mortgage rules to help more Canadians to purchase their first home.
She says the changes will come into force in December and better reflect the housing market.
The price cap for insured mortgages will be boosted for the first time since 2012, moving to $1.5 million from $1 million, to allow more people to qualify for a mortgage with less than a 20 per cent down payment.
The government will also expand its 30-year mortgage amortization to include first-time homebuyers buying any type of home, as well as anybody buying a newly built home.
On Aug. 1 eligibility for the 30-year amortization was changed to include first-time buyers purchasing a newly-built home.
Justice Minister Arif Virani is also releasing drafts for a bill of rights for renters as well as one for homebuyers, both of which the government promised five months ago.
Virani says the government intends to work with provinces to prevent practices like renovictions, where landowners evict tenants and make minimal renovations and then seek higher rents.
The government touts today’s announced measures as the “boldest mortgage reforms in decades,” and it comes after a year of criticism over high housing costs.
The Liberals have been slumping in the polls for months, including among younger adults who say not being able to afford a house is one of their key concerns.
This report by The Canadian Press was first published Sept. 16, 2024.
OTTAWA – Statistics Canada says manufacturing sales rose 1.4 per cent to $71 billion in July, helped by higher sales in the petroleum and coal and chemical product subsectors.
The increase followed a 1.7 per cent decrease in June.
The agency says sales in the petroleum and coal product subsector gained 6.7 per cent to total $8.6 billion in July as most refineries sold more, helped by higher prices and demand.
Chemical product sales rose 5.3 per cent to $5.6 billion in July, boosted by increased sales of pharmaceutical and medicine products.
Sales of wood products fell 4.8 per cent for the month to $2.9 billion, the lowest level since May 2023.
In constant dollar terms, overall manufacturing sales rose 0.9 per cent in July.
This report by The Canadian Press was first published Sept. 16, 2024.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets climbed to their best week of the year.
“It’s been almost a complete opposite or retracement of what we saw last week,” said Philip Petursson, chief investment strategist at IG Wealth Management.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
While last week saw a “healthy” pullback on weaker economic data, this week investors appeared to be buying the dip and hoping the central bank “comes to the rescue,” said Petursson.
Next week, the U.S. Federal Reserve is widely expected to cut its key interest rate for the first time in several years after it significantly hiked it to fight inflation.
But the magnitude of that first cut has been the subject of debate, and the market appears split on whether the cut will be a quarter of a percentage point or a larger half-point reduction.
Petursson thinks it’s clear the smaller cut is coming. Economic data recently hasn’t been great, but it hasn’t been that bad either, he said — and inflation may have come down significantly, but it’s not defeated just yet.
“I think they’re going to be very steady,” he said, with one small cut at each of their three decisions scheduled for the rest of 2024, and more into 2025.
“I don’t think there’s a sense of urgency on the part of the Fed that they have to do something immediately.
A larger cut could also send the wrong message to the markets, added Petursson: that the Fed made a mistake in waiting this long to cut, or that it’s seeing concerning signs in the economy.
It would also be “counter to what they’ve signaled,” he said.
More important than the cut — other than the new tone it sets — will be what Fed chair Jerome Powell has to say, according to Petursson.
“That’s going to be more important than the size of the cut itself,” he said.
In Canada, where the central bank has already cut three times, Petursson expects two more before the year is through.
“Here, the labour situation is worse than what we see in the United States,” he said.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
— With files from The Associated Press
This report by The Canadian Press was first published Sept. 13, 2024.
