(Bloomberg) -- For months, President Xi Jinping appeared unfazed by slowing growth as stocks sank, prices fell and discontent grew around China. This week...
-- For months, President Xi Jinping appeared unfazed by slowing growth as stocks sank, prices fell and discontent grew around China . This week showed he’s not willing to tolerate any more pain.The People’s Bank of China led the charge to revive sentiment on Tuesday in a rare televised press briefing beamed live around the world, opening its war chest to stock markets and making money cheaper to borrow.
The barrage of policy announcements marked a sea change in Xi’s approach to managing China’s $18 trillion economy, after proudly resisting big stimulus for so long. The Chinese leader has in recent years put national security and reducing financial risks firmly in the front-seat, displaying a willingness to sacrifice some growth to make the economy more independent of an increasingly hostile US.
But while the multi-pronged policy package marked a shift for Xi, and got equity markets excited, it did little to address deep-seated problems plaguing the longer-term outlook. That would likely require major fiscal firepower — something that could propel Xi into “bazooka” territory, if unleashed. While the Politburo offered no specifics on expanded government spending, Reuters reported the Ministry of Finance is planning to issue $284 billion worth of special sovereign bonds this year, with half devoted to boosting consumption.
Although the policy blitz was encouraging, Xi vowed as recently as July to make “high-quality development” the economic priority, using a slogan that’s shorthand for relying on advanced manufacturing to generate growth.
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