China’s Third Plenum Communique Sparks Market Reaction and Economic Growth Speculations

Investment analysts have assessed the recent communique from China’s third plenum, with a somewhat-bullish sentiment prevailing. Despite the positive outlook, the stock market experienced a decline in benchmark indexes in Shanghai, Shenzhen, and Hong Kong following the release of the communique. The renminbi also continued its depreciation against the US dollar.

One highlight of the communique was the government’s mention of China’s 2024 economic growth target, set at around 5 per cent. This has led to speculations that a range of policies will be introduced to support and stimulate the economy. Analysts from major investment banks and asset managers shared their perspectives on the third plenum. They emphasized the need for additional demand-side easing measures, especially in fiscal and housing areas, to achieve the targeted GDP growth rate.

While the communique lacked detailed information, analysts remain optimistic about the government’s commitment to economic reforms and stability. The focus on supporting advanced technology development to enhance productivity and promote consumption-led growth was highlighted by HSBC Holdings’ Chief Economist. Analysts anticipate further policy support in the second half of the year to achieve the growth target, with an emphasis on reforms in key sectors such as real estate and local government debt management.