Politburo in 'forceful' push to target property rebound

China's top leaders ramped up urgent efforts to revive growth with pledges to support fiscal spending and stabilize the beleaguered property sector, giving new momentum to stimulus measures aimed at arresting a slowdown in the world's second-largest economy.

President Xi Jinping's huddle of the 24-man Politburo concluded with a promise to strive to achieve the country's annual economic goals, Xinhua news agency reported yesterday.

Officials pledged action to make the real estate market "stop declining," in their strongest vow yet to stabilize the crucial sector, after new home prices fell in August at the fastest pace from the previous month since 2014.

The government will strictly limit the construction of new home projects, the Politburo said, as part of efforts to ease residential oversupply. No specifics were offered on the size of fiscal spending, with agencies likely to fill out the details in the coming days and weeks.

China is also considering injecting up to 1 trillion yuan (HK$1.11 billion) of capital into its biggest state banks to increase their capacity as part of broad stimulus measures Beijing introduced this week to boost the ailing economy and sluggish markets. The funding will mainly come from the issuance of new special sovereign bonds

The Politburo readout was notable for its detailed language addressing specific policy tools such as calling for the "forceful" implementation of rate cuts, a contrast to its typically vague, sweeping statements. That departure underscores officials' need to talk directly to markets, days after the central bank unleashed a powerful policy blitz.

The instructions on the housing sector marked "the first time since the downturn began that the Politburo has explicitly targeted a market rebound," Julian Evans-Pritchard, head of China economics at Capital Economics, said in a note.

The readout came hours earlier than normal, just as afternoon trading began. After its release, China's CSI 300 Index - a gauge of onshore Chinese stocks - extended gains to 4.2 percent, erasing losses for the year, while a gauge of developers tracked by Bloomberg jumped 15.9 percent.

The focus on the economy at this month's meeting - for the first time since 2018 - was unusual as that agenda is usually reserved for the Politburo's April, July and December huddles. That deviation speaks to officials' desire to allay rising economic anxiety after growth slowed to the worst pace in five quarters.

Leaders urged for "calm" in handling the challenges, while seeming to acknowledge it was time for a shift in gear. Officials were given clear instructions to "face up to difficulties, strengthen confidence, and earnestly enhance the sense of responsibility and urgency of doing economic work well."

In a sign the government is increasingly concerned about the economic malaise, the Politburo vowed to strengthen aid for people with difficulties in finding jobs and lower-income groups. The previous day the country said it will give one-off cash handouts to residents facing hardship and vowed more benefits for some unemployed people.

The Politburo also urged officials to "issue and make good use" of the ultra-long special sovereign bonds and local special notes to drive investment.

Local governments have accelerated bond issuance since August after keeping the pace slow, as they struggled to find quality projects to invest in while trying to reduce debt risks.

"The frequency and magnitude of policy rollouts have exceeded our expectation," HSBC Holdings economists wrote in a note.

AGENCIES