While global markets focus on indicators of China’s economic outlook, no aggressive stimulus messages are expected from the China Politburo meeting.
The important item of the global economic agenda will be for the Chinese recovery, at the July meeting of the Politburo, where the economy will be discussed.
Economists are of the opinion that there will be no big messages of encouragement from this meeting, where specific steps are not disclosed, but verbal guidance messages can emerge.
Bruce Pang, chief economist at Jones Lang LaSalle, said Chinese politicians would refrain from declaring a “strong cure” for the economy. “I don’t expect the aggressive stimulus policies that the markets expect to be announced,” Pang said. According to Pang, China may call for local governments to increase the issuance of private bonds, which use it to finance infrastructure projects, instead of expanding the 3% budget deficit target.
Economists do not expect aggressive steps in monetary policy either. UBS Group expects a 10 basis point cut in Chinese policy rates and 25 basis points on required reserves in the second half of the year.
Changjiang Securities Chief Economist Wu Ge, who has advised Chinese politicians in the past, also notes that a rate cut may occur in the third quarter.