China’s Politburo Supercharges Stimulus With Housing، Rates Vows

China’s top leaders ramped up efforts to revive growth with pledges to support fiscal spending and stabilize the beleaguered property sector، giving new momentum to stimulus measures aimed at arresting a slowdown in the world’s second-largest economy.

President Xi Jinping’s huddle of the 24-man Politburo concluded with a promise to strive to achieve the country’s annual economic goals، the official Xinhua News Agency reported Thursday. Officials pledged action to make the real estate market “stop declining،” their strongest vow yet to stabilize the crucial sector after new-home prices fell in August at the fastest pace since 2014.

Limiting the construction of homes

The government will also strictly limit the construction of new-home projects، the Politburo said، as part of efforts to ease residential oversupply — although such building has ground to a near-halt. 

While the Politburo offered no specifics on fiscal spending، Reuters reported late Thursday that the Ministry of Finance is planning to issue 2 trillion yuan ($284 billion) of special sovereign bonds this year. That funding will be evenly split between stimulating consumption and helping local governments tackle debt problems، Reuters said، citing two people familiar with the matter. 

“Two trillion yuan well beats expectations،” said Bruce Pang، chief economist for Greater China at Jones Lang LaSalle Inc. “This is a big bang fiscal stimulus that underpins both boosting consumption and defusing risks.”

The package revealed this week، including reported plans for the sovereign bond sales، would lift the economy by 0.2 percentage points، helping the government hit its annual growth goal of around 5%، he added.

The Politburo readout came hours earlier than normal، just as afternoon trading began. After its release، China’s CSI 300 Index — a gauge of onshore stocks — extended gains to 4.2%، erasing losses for the year، while a gauge of developers tracked by Bloomberg jumped 15.9%. 

Policy tools

The yield on China’s 10-year bonds rose 7 basis points، extending an earlier increase on the Politburo’s stimulus plan. That marked the biggest jump since November 2022.

The statement was also notable for its detailed language around policy tools such as calls for the “forceful” implementation of rate cuts، a contrast with typically vague، sweeping statements. That departure underscores officials’ need to talk directly to markets، days after the central bank unleashed a powerful policy blitz that sent a benchmark stock index soaring by the most since 2020.