China: Structural reforms will help stabilise the economy – ANZ

Analysts at ANZ are expecting that the Chinese policymakers are likely to continue to support the economy through proactive policies.

Key Quotes

“China’s top decision-making body, the Central Politburo of the Communist Party, released a statement 19 April outlining the country’s economic situation. The statement confirms that growth in the first quarter of the year has been better than expected. It also deems structural factors to be contributing to ongoing downward pressures. The statement also highlights the following:

• Supply-side structural reforms will continue to be the policy priority, and the authorities will carry on with structural deleveraging to control overall risks.
• The development of high quality manufacturing will be key to stabilise the economy.
• Houses are for living, not for speculation.”

“We expect Chinese policymakers to continue to support the economy through proactive policies. However, as the statement did not mention “keeping liquidity reasonably ample” as it did previously, we believe that going forward the People’s Bank of China (PBoC) will be more prudent in order to control macro leverage. Thus, the likelihood of a cut in the required reserve rate (RRR) for all commercial banks before June has become diminished.”