Reading the July Politburo Meeting (with transcript)
faster fiscal spending, and a gesture on balanced trade
The July Politburo meeting just wrapped up, below is the transcript with some of my highlights.
A subtle change in tone. This time the readout says, “we must attach great importance to the difficulties and challenges in economic operations” (同时，要高度重视经济运行中的困难挑战). That single word “great importance” (高度) is doing a lot of work. It suggest that the leadership now clearly perceives the problems building up in the economy.
firmer counter-cyclical stance. The meeting called to “intensify countercyclical adjustment” (加大逆周期调节力度) and, notably, to “promptly plan and roll out pragmatic and effective incremental policies” (及时谋划出台务实管用的增量政策). This lines up with the counter-cyclical direction Premier Li stressed at the July symposium. Currently, we are at the stage of researching (planning) potential incremental policies, putting them in effect takes more time.
The fiscal-monetary frame keeps the same tone, just spend the money faster. The overall framework is unchanged, yet the emphasis has clearly moved toward accelerating fiscal outlays. In April the language was “make full and good use of macro policy” and “keep optimizing the structure of fiscal spending” (用好用足宏观政策、持续优化财政支出结构). By July that had been upgraded to “macroeconomic policies must be more forceful and effective, accelerating the pace of fiscal expenditure and the use of bond funds” (宏观政策要发力提效、加快财政支出和债券资金使用进度). July reads as more action-oriented and more urgent, and it names bond funds directly. It’s basically a prod to local governments to actually get the money out the door. That fits the first-half backdrop I flagged in the outlook: expenditure under government-managed funds down 16.4% year-on-year, and local investment visibly contracting.
On the export, the call to “expand the space for mutually beneficial international economic and trade cooperation, vigorously develop trade in services, and promote balanced trade development” (拓展国际经贸互利合作空间、大力发展服务贸易、促进贸易平衡发展) reads, to me, partly as a response to Europe’s recent complaints about its trade deficit with China. The wording suggests there’s still room to negotiate at this stage.
In terms of the general focus, it’s still on domestic demand, it’s worth noticing that services consumption gets its own billing. The readout says, “expand the supply of high-quality goods to meet the consumption needs of different groups, and tap the potential of service consumption” (适应不同群体消费需求扩大优质供给、挖掘服务消费潜力). As I expected inthe outlook, the pro-consumption push leans more toward services.
There are some new language on the private sector and market order. Compared with April, July adds “optimize the development environment for the private economy, and promote the standardized and healthy development of the platform economy” (优化民营经济发展环境、推动平台经济规范健康发展). It also elevates the “national unified market” into an actual regulation， “formulate and implement regulations on building a unified national market”It’s positioning the rulebook as the instrument for reining in local involution-style competition.
below is the transcript I made with the help of AI:
Political Bureau of the CPC Central Committee Holds Meeting, Decides to Convene Fifth Plenary Session of the 20th CPC Central Committee, Analyzes and Studies Current Economic Situation and Economic Work; Xi Jinping, General Secretary of the CPC Central Committee, Presides Over the Meeting
Beijing, July 30 (Xinhua) — The Political Bureau of the Communist Party of China (CPC) Central Committee held a meeting on July 30, deciding to convene the Fifth Plenary Session of the 20th CPC Central Committee in Beijing in October this year. The main items on the agenda are for the Political Bureau of the CPC Central Committee to report its work to the Central Committee, and to study a number of major issues concerning the persistent advancement of full and rigorous Party self-governance. The meeting analyzed and studied the current economic situation and made arrangements for economic work in the second half of the year. Xi Jinping, General Secretary of the CPC Central Committee, presided over the meeting.
The meeting pointed out that since the 18th CPC National Congress, great achievements have been made in exercising full and rigorous Party self-governance, opening up new frontiers in the self-reform of a century-old major party, driving historic accomplishments and historic transformations in the cause of the Party and the country, and enabling the Party and the people to seize the historic initiative in strengthening the Party and the nation. At the same time, as profound changes have taken place in global, national, and Party conditions, full and rigorous Party self-governance also faces many new circumstances and new problems. The whole Party must, from the strategic height of consolidating the Party’s governing position and fulfilling the Party’s mission and tasks, gain a profound understanding of the great significance of persistently advancing full and rigorous Party self-governance. We must firm up our confidence, maintain our resolve, and with higher standards and more practical measures, uphold and apply well the valuable experience of full and rigorous Party self-governance in the new era, effectively rectify and resolve the prominent problems facing Party building, and consolidate and develop well the sound political situation formed in Party management and governance.
The meeting emphasized that persistently advancing full and rigorous Party self-governance requires upholding Marxism-Leninism, Mao Zedong Thought, Deng Xiaoping Theory, the Theory of Three Represents, and the Scientific Outlook on Development, comprehensively implementing Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, thoroughly studying and applying Xi Jinping’s thought on Party building, and implementing the general requirements for Party building in the new era. It requires taking the Party Constitution as the fundamental basis, upholding and strengthening the centralized and unified leadership of the CPC Central Committee, and focusing on enhancing the Party’s capacity for long-term governance, maintaining the Party’s advanced nature and integrity, and preserving the close ties between the Party and the people. It requires unwaveringly adhering to a strict tone, improving the system for full and rigorous Party self-governance, taking the Party’s political building as the overarching principle, comprehensively advancing all aspects of Party building, fully stimulating the enthusiasm, initiative, and creativity of the whole Party, and continuously achieving the Party’s self-purification, self-improvement, self-renewal, and self-elevation. This will ensure that the Party always remains a Marxist governing party that stands at the forefront of the times, enjoys the wholehearted support of the people, can withstand all kinds of storms and tests, and is full of vigor and vitality, and that it always remains the strong leadership core of the cause of socialism with Chinese characteristics.
The meeting held that since the beginning of this year, the CPC Central Committee with Comrade Xi Jinping at its core has united and led the whole Party and the people of all ethnic groups across the country in forging ahead with determination and striving courageously. By coordinating the two overall situations of domestic and international affairs, coordinating development and security, and effectively responding to various external shocks and internal difficulties, China’s economy has shown a development trend of shifting toward new drivers and optimizing its structure. At the same time, we must attach great importance to the difficulties and challenges in economic operations, firm up our confidence, rise to the challenges, make good use of various opportunities and advantages, and promote the steady and sustained progress of high-quality development.
The meeting emphasized that to do a good job in economic work in the second half of the year, we must uphold Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era as the guide, adhere to the general principle of pursuing progress while ensuring stability, fully, accurately, and comprehensively implement the new development philosophy, accelerate the building of a new development pattern, and better coordinate the two overall situations of domestic and international affairs as well as development and security. We must continue to deepen reform and opening up, accelerate the transition between old and new growth drivers, effectively implement a more proactive fiscal policy and an appropriately accommodative monetary policy, give full play to the effectiveness of all existing policies, promptly plan and roll out pragmatic and effective incremental policies, intensify countercyclical adjustment, step up efforts to expand domestic demand and optimize supply, earnestly safeguard and improve people’s livelihoods, enhance the momentum of development and stimulate social vitality, promote the sustained development of the economy toward new drivers, better structures, and improved performance, and strive to achieve a good start to the 15th Five-Year Plan period.
The meeting pointed out that macroeconomic policies must be more forceful and effective, accelerating the pace of fiscal expenditure and the use of bond funds, and vigorously advancing the “two major” initiatives (major national strategies and security capacity building) and the “two new” work (large-scale equipment renewal and consumer goods trade-in programs). The “three guarantees” baseline at the grassroots level—ensuring basic living needs, salary payments, and normal government operations—must be firmly secured. Monetary policy tools should be used comprehensively and adjusted in a timely manner, and the coordinated implementation of fiscal and financial policies to boost domestic demand should be optimized.
The meeting emphasized the need to effectively expand domestic demand, expand the supply of high-quality goods to meet the consumption needs of different groups, and tap the potential of service consumption. Solid progress should be made in the planning and construction of the “six networks.” We must accelerate the building of a modern industrial system, strengthen long-term and stable support for basic research, deeply implement the “Artificial Intelligence Plus” initiative, develop new forms of the intelligent economy, and improve the AI governance system. We should actively promote breakthroughs in frontier technologies and the development of future industries, work hard to build emerging pillar industries, and continue to promote the transformation and upgrading of traditional industries.
The meeting emphasized the need to foster a fair and orderly market competition environment, formulate and implement regulations on building a unified national market, continue to comprehensively address “involution-style” competition, and resolve the problem of overdue corporate payments on a regular basis. We must deepen reform of state-owned assets and state-owned enterprises, optimize the development environment for the private economy, and promote the standardized and healthy development of the platform economy.
The meeting pointed out the need to expand the space for mutually beneficial international economic and trade cooperation, vigorously develop trade in services, and promote balanced trade development. We should improve the outbound investment management system and the comprehensive overseas service system, and actively attract and utilize foreign investment.
The meeting emphasized the need to do a good job in work related to agriculture, rural areas, and farmers without any slackening, continue to consolidate and expand the achievements of poverty alleviation, establish and improve mechanisms for building, operating, and maintaining high-standard farmland, stabilize the production and prices of hogs and other agricultural and livestock products, and promote steady growth in farmers’ incomes. We must ensure the supply and price stability of agricultural inputs, do a good job in agricultural production, and secure a bumper harvest of autumn grain and grain for the whole year.
The meeting pointed out the need to strengthen livelihood protection through multiple measures, increase employment support for key groups, and do a good job in protecting the rights and interests of flexible workers and those in new forms of employment. We should ensure services and support for “the elderly and the young,” and improve a tiered and categorized social assistance system. We must strengthen ecological and environmental protection, wage the tough battle of the “Three-North” Shelterbelt Program, and actively and prudently advance carbon peaking and carbon neutrality.
The meeting emphasized the need to earnestly build a solid security barrier. We must stabilize the real estate market, effectively implement a package of debt-resolution plans, and steadily advance the reform and risk mitigation of local small and medium-sized financial institutions, reducing their quantity while improving their quality. We should deepen comprehensive reform of investment and financing in the capital market and enhance the market’s resilience and confidence. We must thoroughly investigate and address various risks and hidden dangers, and resolutely curb the occurrence of major and serious accidents. We should strengthen the investigation and management of hidden dangers in dilapidated and dangerous reservoirs, river embankments, areas prone to flash floods and geological disasters, and low-lying and flood-prone urban areas. We must do solid work in flood prevention, emergency rescue, and disaster relief, and make every effort to protect the safety of people’s lives and property.
The meeting pointed out the need to consolidate and expand the achievements of the education campaign on establishing and practicing a correct view of political performance, and to encourage leading officials at all levels to create new achievements in high-quality development with a more uplifting and positive spirit.
The meeting also studied other matters.
Reading politburo transcripts reminds me of Federal Reserve minutes. But the Politburo has far more tools, both monetary and fiscal!