Property market not to be used as short-term boost

China will step up efforts to boost demand and support the economy, but will not use the property market as a form of short-term stimulus, a top decision-making body of the Communist Party said yesterday.

The Political Bureau of the Communist Party of China Central Committee held a meeting yesterday, analyzing the economic situation, arranging economic work in the second half of the year, and reviewing a Party accountability regulation and a report on discipline inspection.

The Chinese economy maintained the steadily advancing momentum in the first half of 2019, with the main macroeconomic indicators remaining in the reasonable range, according to a statement released after the meeting.

As the Chinese economy faces new risks and increasing downward pressure, the country should focus on long-term trends and key issues so as to turn crises into opportunities, the statement said.

“Fiscal policy should be strengthened to improve efficiency and continue to implement the policy of tax and fee cuts,” it said, reaffirming that monetary policy will remain prudent to keep liquidity conditions ample.

China will balance its efforts to stabilize growth, promote reforms, adjust economic structures and prevent risks, it said. The country will adhere to the principle of “housing is for living in, not for speculation,” implement the long-term mechanism to maintain the sound development of the real estate market, and not use real estate as a short-term means of stimulating the economy, according to the meeting.

The Politburo also said the country will take targeted measures to support the development of private enterprises, accelerate the clearing of “zombie enterprises,” effectively handle trade frictions and keep employment, the financial sector, foreign trade, foreign and domestic investments, and expectations stable.

China’s opening-up will be expanded and major opening-up policies will be further implemented. The financial supply-side structural reform will be advanced and financial institutions should be encouraged to increase medium- and long-term financing to the manufacturing industry and private companies.

The sci-tech innovation board should properly implement its registration-based initial public offering system with information disclosure at its core and improve the quality of listed firms, said the statement.

China also will take various steps to boost domestic demand, including reforms to expand consumption and stabilize investment in the manufacturing industry.

Central bank governor Yi Gang said recently that current interest rate levels are appropriate.

With an eye on debt risks, China has been leaning more heavily on fiscal stimulus during the current downturn, announcing tax cuts of nearly 2 trillion yuan (US$294 billion) and a quota of 2.15 trillion yuan for special bond issuance by local governments for infrastructure projects.

The central bank has cut banks’ reserve requirements six times since early 2018, in a bid to spur bank lending, especially for small and private firms that are vital for economic growth and employment.

The Politburo also pledged to guide financial institutions to increase medium- and long-term financing for manufacturers and private enterprises.