CHINA: J.P. Morgan On Politburo Meeting

The US Bank didn't see any major shifts in the policy stance from the Politburo meeting, but states the focus shouldn't just be on the magnitude of macro easing, see below for more details.

• "The Politburo meeting reckoned that the economy had been on a continuous recovery path through 1H23, with a focus on high-quality growth and industrial upgrade, laying a solid foundation to achieve the full-year goal of economic-social development. Meanwhile, the tone seemed to shift modestly to the cautious side. The meeting pointed out new difficulties and challenges for the economy’s recovery. First is “insufficient domestic demand”, with some corporates facing operational difficulties. Policymakers were concerned about “potential risks in certain key sectors”, along with complicated challenges in the external environment. Overall, the Politburo meeting recognized that the post-reopening economic recovery will likely be a bumpy one, though the fundamental, medium and long term outlooks remain optimistic."
  
  
  
  "There appears to be no significant change in the overall tone on macro policy. While the meeting reiterated proactive fiscal policy and prudent monetary policy, some nuanced changes are worth highlighting, as the statement stressed the strengthening of counter-cyclical macro policy adjustment and the buildup of potential policy buffers/ toolkits."
  
  
• "....It will take more than macro policy easing to address economic challenges in China. The loss of private business confidence is now a major ongoing headwind. But restoring business confidence is less about macro-policy support and more about political assurances of a predictable regulatory environment. Last week, the Party and the State Council jointly released a 31-point document supporting the private sector. This is a welcome first step, but the market response has so far been muted as the market is waiting for more concrete actions. While expectations remain low, it could become a source of positive surprise if followed up with concrete measures."