(Bloomberg) — China said it will implement “reasonable” monetary policy next year and ensure fiscal plans are “sustainable,” signaling it will limit its stimulus measures as the economy continues to recover.
The comments were published by state media Friday after the Communist Party’s annual Central Economic Work Conference. The ruling party uses the event to set its policy framework for the coming year, with analysts expecting a renewed focus in 2021 on slowing the pace of debt growth and insulating the economy from tensions with the U.S.
The language around monetary and fiscal policy was a change from earlier guidance, indicating a more measured approach to stimulus in 2021 after this year’s boost. At the same time, authorities vowed there wouldn’t be a quick reversal as the economy’s rebound “is not yet solid.”
China should “maintain necessary support” for the recovery, “make policy operations more precise and effective” and “make no sharp turn,” the conference decided.
The ruling party is expected to flesh out details of its policies and publish more precise targets when the National People’s Congress meets, usually in March.
China is the only major economy expected to grow this year, thanks to its effective control of the coronavirus and fiscal and monetary stimulus. The recovery so far has relied on surging property and state-led infrastructure investment, with private-sector manufacturing investment and household consumption lagging behind last year’s levels.
Goldman Sachs Group Inc. economists, led by Zhennan Li, see the fiscal deficit target returning to 3% of gross domestic product from 3.6% this year and credit growth slowing.
“Although cyclical policy would normalize next year from this year’s significant expansionary stance, we believe the likelihood of a “policy cliff” is low and the government would be mindful of the timing and magnitude of exit/reduction of policy support,” they said.
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Debt Ratio
With the growth forecast to accelerate to more than 8% in 2021 from 2% this year, Beijing is turning its focus once again on reducing risks in the economy as debt soars.
The government will aim to “keep the macro-leverage ratio basically stable” next year, according to state media. Authorities will also seek to slow the growth in money supply and aggregate financing to match the expansion of nominal economic growth, which should keep the ratio of debt to gross domestic product about the same level as now.
Houze Song, a research fellow at the Paulson Institute, said the latest policy signal from the economic work conference is “growth negative.”
“Local government debt is back to the top of Beijing’s agenda,” he said. “Since local expenditure accounts for the majority of fiscal support, fiscal consolidation at local level will be a significant drag on growth next year.”
Beijing’s aim to increase technological self-sufficiency following tensions with Washington was clear from the statement, with increasing “strategic scientific and technological strength” listed as next year’s most important economic task. That was followed by increasing “independent control” over supply chains, particularly for key technologies where “choke points” exist.
Other highlights from the statement:
Strengthen the capacity of the state’s strategic technology, improve self-reliance and control over industrial and supply chains
Expand domestic demand, including by improving social security policies
Continue “reform and opening” policies, such as improving intellectual property protections, and the environment for businesses
Increase anti-monopoly work
Actively consider joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, a preferential trade pact
Develop an action plan for peaking carbon emissions before 2030, supporting regions with the right conditions to peak earlier
Maintain the “basic stability” of the yuan exchange rate at a “reasonable” level
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 also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
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 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.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
