The first set of announcements from the People’s Bank of China (PBOC) and other financial regulators focused on monetary easing, including interest rate cuts, reduced reserve requirements for banks, lower costs for existing mortgages and targeted equity market support. The Ministry of Finance followed with fiscal support announcements, prioritising local government debt, property destocking and increased spending on the safety net for low-income groups.
The Sept 26 Politburo meeting marked a clear change in China’s policy priorities. Since 2021, financial deleveraging and austerity have been the primary agenda. However, faced with weakening demand and a slowing economy, there’s now a clear urgency to support growth. We think a policy turning point is evidenced by the Politburo’s strong rhetoric about the economy, calls to reverse the property decline and subsequent expansionary policies.
A decisive policy pivot
