BEIJING • China's leadership signalled that further stimulus measures are being planned, as disappointing economic data showed that the current piecemeal approach is not working.
The nation's economic situation is changing, downward pressure is increasing and the government needs to take timely steps to counter this, according to a statement from a politburo meeting on Wednesday chaired by President Xi Jinping.
The signal of increasing urgency came just hours after purchasing manager reports showed an across-the-board deterioration that risks becoming a broader drag on global growth. The world's second-largest economy is being damaged by its trade war with the United States and a domestic debt clean-up.
With those pressing constraints, officials have added modest policy support so far, ranging from tax cuts to regulatory relief, rather than repeating the fiscal firepower seen after a previous slowdown.
Investors seem unpersuaded by the drip-feed approach, with the yuan hovering around a decade low and stocks sliding.
"Accepting slower growth has long been a challenge for Beijing, but now the rate of slowdown is firmly out of the comfort zone," said Ms Katrina Ell, an economist at Moody's Analytics in Sydney.
"In recent years, the balancing act has been addressing risks in the financial system against pressure to stabilise economic growth. It appears the latter is again more of a priority."
Accepting slower growth has long been a challenge for Beijing, but now the rate of slowdown is firmly out of the comfort zone.
MS KATRINA ELL, an economist at Moody's Analytics in Sydney.
Manufacturing growth slowed to the lowest level in over two years, and while economists had seen further tax cuts coming, few had predicted bigger stimulus for now.
The US is preparing to announce by early next month tariffs on all remaining imports from China if December talks between Mr Xi and US President Donald Trump fail to ease the trade war. An increase in the tariffs already in effect on US$200 billion (S$276 billion) worth of Chinese imports scheduled for January would provide a stiff test to many exporters.
China's leaders had politically committed to avoiding a "flood" of stimulus, and a multi-year campaign to curb the rate of debt expansion appeared to be paused, not scrapped.
"The leadership is paying great attention to the problems, and will be more pre-emptive and take action in a timely manner," said the politburo statement. It reiterated that China will maintain a proactive fiscal policy and a prudent monetary policy, while trying to find solutions to help private businesses.
The government and the central bank have already introduced measures this month to stabilise sentiment, adding to steps to boost liquidity in the financial system, tax deductions for households and targeted measures aimed at helping exporters.