China | Understanding the policy signals of the July CPC Politburo meeting

Summary

The July Politburo meeting emphasized the importance of the domestic market for Chinese economy amid COVID-19 pandemic. In addition, the meeting also confirmed that the stimulus policy will be gradually normalized with ongoing rollout of targeted fiscal stimulus and more conservative monetary policy stance.

Key points

• Key points:
• The eye-catching Political Bureau of the Communist Party of China (CPC) meeting concluded on July 30th that will chart the development path of Chinese economy in 2H 2020 and ahead.
• The “dual circulation” growth model with a focus on “internal-circulation” is the new strategy for Chinese authorities in coping with new global circumstances.
• The gradual stimulus policy will be normalized in 2H amid ongoing V-shape recovery.
• The post-pandemic growth engine of Chinese economy includes domestic demand, new infrastructure investment and new urbanization.

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