(Sept 30): Chinese President Xi Jinping urged caution in the face of what he said could be a rough patch ahead for the country, in his first public comments since the government announced an unprecedented stimulus package.
“We must be mindful of potential dangers, and be prepared for rainy days,” Xi said on Monday in a speech marking the 75th anniversary of the founding of the People’s Republic of China.
Xi didn’t provide any new details of the economic measures in his speech to the National Day reception held at the Great Hall of People in Beijing. The effort includes interest-rate cuts and support for the housing and stock markets.
“The road ahead cannot be smooth,” Xi said. “There will be obstacles and difficulties, even major challenges like surging torrents and storms.”
China’s economy has been slowing, as the prolonged housing slump, weak domestic demand and falling prices combined to put this year’s growth target increasingly out of reach. It remains to be seen whether the announced support and a promised increase in spending mean a lasting turnaround is underway.
The pessimism was palpable before the stimulus announcements, with Chinese consumer confidence falling in August to the lowest level since November 2022. Figures released earlier on Monday showed that industrial activity contracted for a fifth straight month in September, highlighting the urgency for Beijing to act.
The series of policy announcements since last Tuesday had an immediate effect on the share market, with Chinese equities capping their biggest weekly rally since 2008. Since Monday last week, the benchmark stock index has gained more than 20% to enter a technical bull market.
Separately, Xi emphasised opposition to “separatist activities” that aim to bring about Taiwan’s independence. The One-China principle, which acknowledges Beijing’s claim to the self-ruled island, must be upheld, he said.
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