Xi Chairs CPC Top Leadership Meeting, Stressing Economic Stability

Urges officials to guard against ‘black swan,’ ‘grey rhino’ events amid uncertainty

By Chen Qingqing and Qi Xijia

Apr 29, 2022 06:11 PM

Photo: CFP

Xi Jinping, general secretary of the Communist Party of China (CPC) Central Committee, on Friday presided over a meeting of the Political Bureau of the CPC Central Committee to analyze the current economic situation. The meeting stressed coordination of anti-epidemic work and economic development, and urged officials at all-levels to take responsibility in guarding against all kinds of "black swan" and "grey rhino" events amid risks linked to epidemic flare-ups and the Ukraine crisis.

The meeting highlighted the hard-won achievements made since the beginning of this year in coordinating epidemic control with economic and social development, as China has secured stable economic performance and successfully hosted the Beijing 2022 Olympic Winter Games and the Beijing 2022 Paralympic Winter Games.

Noting that the economy faces growing complexities and uncertainties, the meeting stressed the importance of economic stability as well as securing and improving people's livelihood.

The meeting called for upholding the "people first, lives first" principle and the dynamic zero-COVID approach to protect people's lives and health, and reduce the impact of the epidemic on economic and social development to the minimum.

Given the impact of COVID-19 flare-ups and the Ukrainian crisis, the meeting said China's economic and social development now face growing uncertainties and complexities, and there are new challenges in stabilizing growth, employment and consumer prices. 

It also urged authorities to effectively synergize the anti-epidemic work and the social and economic development.

China's capital market had a broad-based rally on Friday afternoon following the meeting.

The benchmark Shanghai stock index made an impressive comeback to above the critical psychological level of 3,000 points, closing 2.41 percent higher on Friday while the Shenzhen Component Index edged up by 3.69 percent to 11,021 points. 

The tech-heavy ChiNext board in Shenzhen has edged up by more than four percent to 2,319 points.

A total of 4,400 stocks have rallied on the two markets with more than 300 stocks hitting the up trading limit.

The onshore yuan also rebounded by more than 500 basis points standing above the 6.6 per US dollar level during intraday trading on Friday.

China's equity and foreign exchange markets recently underwent big swings amid multifaceted uncertainties, however, a number of policy recommendations have been made and actions have been taken with the aim of instilling optimism for the world's second-largest economy. 

The message from the meeting is conducive to the recovery of market confidence, Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management Co, told the Global Times on Friday.

"The moves from the CPC leadership are strategic and decisive with measures covering a wide range of sectors and stabilizing the economy," Yang said.

The moves which follow favorable policies implemented earlier, such as the issuance of coupons, the expansion of infrastructure investment and the cut in reserve ratios, showed that leadership is caring about the capital market, which is conducive to the recovery of market confidence and a rebound, Yang added.

The CPC leadership meeting came after a meeting of the Central Committee for Financial and Economic Affairs on Tuesday that focused on the nation's infrastructure development, calling for a stabilization of the market. The Ministry of Transport said on the same day that the country's logistics woes have been eased after rounds of policy measures. 

Besides reiterating the requirement of ensuring smooth logistics and transportation, the CPC leadership meeting on Friday also called to intensify the adjustment of macroeconomic policies and to achieve economic goals throughout the year. During the meeting, leaders have also stressed the necessity of using various monetary policy tools and full expanding domestic demand. 

China's GDP grew 4.8 percent year-on-year in the first quarter of 2022, maintaining a stable growth range despite "unprecedented downward pressure since the first quarter of 2020" due to COVID-19 flare-ups, supply chain snags and external uncertainties arising from the Russia-Ukraine conflict. 

Friday's meeting also laid out a series of requirements for various sectors including energy, agriculture, service, housing and platform economy. The meeting emphasized the role of spring farming work and stable energy sectors, urging to effectively tackle potential risks in the housing industry, and properly manage the economy. 

In deepening the supply chain reform, the meeting asked to expand the country's opening-up, actively respond to requests made by foreign investors and to stabilize the foreign capital. 

If the epidemic in Shanghai can be put under control in May and the all-board work resumption kicks off, it is believed that China's economic growth in the second quarter should not be lower than that in the first quarter, Tian Yun, former vice director of the Beijing Economic Operation Association, told the Global Times on Friday, predicting a significant sequential quarterly growth in the third and fourth quarters.

Chinese officials have taken various measures to stablize the economy and it is believed that there will be stronger fiscal stimulus in the second quarter, Tian said.

In terms of expanding domestic demand, the main focus will be placed on advancing infrastructure construction, Tian said, expecting the infrastructure investment in the central and western part of China to be accelerated.

Tian declared that although China's foreign trade has been impacted by the temporary slowing throughput at ports caused by the epidemic,the situation should be improved in the second quarter. 

"Foreign investors have not changed much about their stance in China's long-term favorable development environment, especially China's potential future development, growth prospects, and status in the global supply chain," he said.