China’s politburo said the economy was better than expected in the first quarter, but tried to temper expectations for a quick rebound, saying that it’s facing difficult external and domestic situations.
“The economy in the first quarter was generally stable and better than expected and the start was good,” according to the statement carried on state media. “The external economic environment is generally tight, and there is downward pressure on the domestic economy.”
Policy makers need to “be focused, more patient and brave enough to overcome the difficulties,” which are influenced by cyclical factors but are “more structural and institutional,” the statement said.
The warning comes after surprisingly strong first-quarter data showed that gross domestic product, industrial output and retail sales all expanded faster than analysts had forecast. Pro-growth policies since the middle of last year have helped, with the central bank adding stimulus and the government cutting taxes and spending more of the budget earlier in the year.
The meeting reiterated fiscal policy should be proactive and more efficient while monetary policy needed to be prudent and keep a proper balance between tightening and loosening. It also called for “effective” support for private and small firms and reiterated that policymakers will work to resolve their problems accessing finance.
Earlier in the week, the State Council announced that it would work to both lower the cost of loans for small and private companies and expand the amount of money that is lent to them.
Top leaders added “ensuring stability” to their list of key tasks, which already included stabilising growth, promoting reform, restructuring, improving people’s livelihoods and preventing risks.
While repeating that “homes aren’t for speculation,” the meeting said property policy should be city-specific and city governments should take the responsibility of managing markets, leaving the door open for more easing at the local level.