(Bloomberg) -- China sought to allay concerns about the economy’s slowdown with a lengthy state media report outlining how the government is managing risks and remains confident about achieving its targets for the year.
Weaker growth in the third quarter was the result of fading low-base effects and various short-term shocks such as floods and virus outbreaks, according to a commentary published Sunday by the official Xinhua News Agency. The report, which Xinhua said was based on interviews with authoritative experts, was republished by major newspapers including Securities Times and People’s Daily on their websites or social media accounts.
Xinhua said policy makers were determined not to flood the economy with stimulus, while cutting its reliance on property and debt. Policy tools are ample should authorities want to boost growth, it said.
Read More: Chinese Economy Risks Deeper Slowdown Than Markets Realize
Economic growth in the fourth quarter and next year still faces many challenges, such as structural problems in employment and the widening gap between factory and consumer inflation, according to the report. But it’s important to have confidence that China can achieve its targets this year and quality development in the long term, Xinhua said.
Bruce Pang, head of macro and strategy research at China Renaissance Securities Hong Kong Ltd., said the commentary suggests “authorities may want to manage expectations and soothe sentiment” after weak third-quarter economic data.
Here’s a summary of some of the key points in the Xinhua report:
- Trade: While export growth may slow in the fourth quarter, major exporters monitored by the authorities still have many orders through the first half of next year. Trade for the full year is likely to achieve stable growth and continue to provide support to the economy
- Regulatory tightening: The recent crackdown on monopolies wasn’t about targeting and suppressing private companies. Actions to contain the “disorderly expansion of capital” have achieved initial results and are approved by the public. Capital has increased into sectors including innovative technology, new energy, advanced manufacturing and industrial Internet under the policies’ guidance
- Property: Xinhua reiterated financial authorities’ comments that defaults at a few property developers are singular cases and spillover risks to the financial industry are controllable. It called for steadily pushing forward the property tax reform, after China announced Saturday it will widen property tax trials to more areas and start taxing residential property owners
- Supply chains: There are more foreign companies moving into China than exiting the country since the resilience of China’s supply chain during the pandemic has made it more attractive to overseas companies. The country needs to grab the opportunity of a reshuffle in global supply chains
(Updates with more details, comment from economists)
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