(July 30): China’s top officials signalled greater economic support but stopped short of announcing a major stimulus package.

China will “plan to roll out pragmatic and effective new policies in a timely manner,” according to a Xinhua news agency readout following a gathering of the Communist Party’s decision-making Politburo on Thursday in Beijing. Officials also pledged to speed up the pace of public spending.

A deepening slowdown in the world’s second-biggest economy has raised the stakes for the meeting, after an official reading days ago showed China’s growth unexpectedly weakened last quarter to 4.3% from a year earlier, below the 4.5% to 5% target range. 

A months-long slump in public spending was a key factor contributing to the deceleration, while consumers also tightened their belts amid a gloomy jobs market.

Still, with exports soaring at a double-digit pace this year to keep factories humming, economists had expected officials to act with little urgency for now in rolling out any fresh stimulus measures. Many analysts predicted the government would speed up the sales of government bonds to drive faster spending.

Fixing the increasing imbalances in the economy remains a daunting challenge. 

The global oil shock and booming investment in artificial intelligence (AI) further complicated the calculus for China, as industries benefitting from higher crude prices and stronger demand for electronics outperformed the rest. AI-related sectors contributed over half of the economy’s expansion in April-June on a quarter-on-quarter basis, according to one estimate.

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