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.
TORONTO – Canada’s main stock index was higher in late-morning trading, helped by strength in energy stocks, while U.S. stock markets also moved up.
The S&P/TSX composite index was up 34.91 points at 23,736.98.
In New York, the Dow Jones industrial average was up 178.05 points at 41,800.13. The S&P 500 index was up 28.38 points at 5,661.47, while the Nasdaq composite was up 133.17 points at 17,725.30.
The Canadian dollar traded for 73.56 cents US compared with 73.57 cents US on Monday.
The November crude oil contract was up 68 cents at US$69.70 per barrel and the October natural gas contract was up three cents at US$2.40 per mmBTU.
The December gold contract was down US$7.80 at US$2,601.10 an ounce and the December copper contract was up a penny at US$4.28 a pound.
This report by The Canadian Press was first published Sept. 17, 2024.
OTTAWA – Canada’s inflation rate fell to two per cent last month, finally hitting the Bank of Canada’s target after a tumultuous battle with skyrocketing price growth.
The annual inflation rate fell from 2.5 per cent in July to reach the lowest level since February 2021.
Statistics Canada’s consumer price index report on Tuesday attributed the slowdown in part to lower gasoline prices.
Clothing and footwear prices also decreased on a month-over-month basis, marking the first decline in the month of August since 1971 as retailers offered larger discounts to entice shoppers amid slowing demand.
The Bank of Canada’s preferred core measures of inflation, which strip out volatility in prices, also edged down in August.
The marked slowdown in price growth last month was steeper than the 2.1 per cent annual increase forecasters were expecting ahead of Tuesday’s release and will likely spark speculation of a larger interest rate cut next month from the Bank of Canada.
“Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate,” wrote CIBC senior economist Andrew Grantham.
Benjamin Reitzes, managing director of Canadian rates and macro strategist at BMO, said Tuesday’s figures “tilt the scales” slightly in favour of more aggressive cuts, though he noted the Bank of Canada will have one more inflation reading before its October rate announcement.
“If we get another big downside surprise, calls for a 50 basis-point cut will only grow louder,” wrote Reitzes in a client note.
The central bank began rapidly hiking interest rates in March 2022 in response to runaway inflation, which peaked at a whopping 8.1 per cent that summer.
The central bank increased its key lending rate to five per cent and held it at that level until June 2024, when it delivered its first rate cut in four years.
A combination of recovered global supply chains and high interest rates have helped cool price growth in Canada and around the world.
Bank of Canada governor Tiff Macklem recently signalled that the central bank is ready to increase the size of its interest rate cuts, if inflation or the economy slow by more than expected.
Its key lending rate currently stands at 4.25 per cent.
CIBC is forecasting the central bank will cut its key rate by two percentage points between now and the middle of next year.
The U.S. Federal Reserve is also expected on Wednesday to deliver its first interest rate cut in four years.
This report by The Canadian Press was first published Sept. 17, 2024.
FREDERICTON – New Brunswick‘s finance minister says the province recorded a surplus of $500.8 million for the fiscal year that ended in March.
Ernie Steeves says the amount — more than 10 times higher than the province’s original $40.3-million budget projection for the 2023-24 fiscal year — was largely the result of a strong economy and population growth.
The report of a big surplus comes as the province prepares for an election campaign, which will officially start on Thursday and end with a vote on Oct. 21.
Steeves says growth of the surplus was fed by revenue from the Harmonized Sales Tax and federal money, especially for health-care funding.
Progressive Conservative Premier Blaine Higgs has promised to reduce the HST by two percentage points to 13 per cent if the party is elected to govern next month.
Meanwhile, the province’s net debt, according to the audited consolidated financial statements, has dropped from $12.3 billion in 2022-23 to $11.8 billion in the most recent fiscal year.
Liberal critic René Legacy says having a stronger balance sheet does not eliminate issues in health care, housing and education.
This report by The Canadian Press was first published Sept. 16, 2024.
