(Beijing) The economic recovery in China is at “a crucial stage”, judged Chinese President Xi Jinping, at a time when difficulties in the real estate sector, debt and sluggish consumption are weighing on the growth of the world’s second largest economy. .
“Efforts should be undertaken to increase domestic demand and create a mutually virtuous environment for consumption and investment,” Xi Jinping urged according to the report, published Friday by state television, of a meeting held two days earlier devoted to the country’s economic orientations in 2024.
“Proactive fiscal policies must be strengthened appropriately,” he insisted.
This formulation seems to suggest more targeted measures rather than a massive support plan for which some economists have been calling in recent months, at the risk of increasing the country’s debt.
The promising post-COVID-19 recovery at the start of the year is now hampered by a lack of Chinese confidence in the future which is penalizing consumption, high youth unemployment, and sluggish international demand which is having repercussions on exports.
An unprecedented crisis in real estate, with its share of developers on the verge of bankruptcy and unfinished housing, is also a significant brake on activity.
This suffering sector has long represented, along with construction, around a quarter of China’s gross domestic product (GDP).
It is also an important source of income for local authorities, whose finances are drained after three years of staggering expenditure to fight COVID-19.
Ratings agency Moody’s downgraded China’s credit rating outlook from “stable” to “negative” on Tuesday, citing the country’s debt and sluggish growth.
“(We) must resolutely protect ourselves against systemic risks,” underlined the Chinese leader, at a time when the risk of bankruptcy of a certain number of real estate developers (Evergrande, Country Garden, etc.) threatens the financial system and social stability. .
To revive a struggling sector, the government has stepped up support measures in recent months, but the results remain inconclusive.
China is aiming for “around 5%” growth this year, a goal that could be difficult to achieve, some economists say.
Last year, the Asian giant’s GDP grew by 3%, far from the official target of 5.5%, and one of the weakest rates recorded by the country in four decades.