China’s top leaders pledged on Monday to keep economic growth within a reasonable range this year, state radio said after a meeting of the politburo chaired by President Xi Jinping.
China will maintain a pro-active fiscal policy and prudent monetary policy, state radio quoted the politburo, a top decision-making body of the ruling Communist Party, as saying, Reuters reported.
China’s leaders are expected to target growth in a range of 6.5% to 7% this year, sources familiar with their thinking have said, setting a range for the first time because policymakers are uncertain on the economy’s prospects.
China’s politburo reiterated that it will step up reform on the supply side while keeping the country’s economic growth within a reasonable range this year.
The politburo, which held a meeting to review the government’s work report for 2016 and the 13th five-year plan, also reiterated that the government will continue with its proactive fiscal policy and prudent monetary policy this year, the China National Radio reported.
The work report and the five-year plan will be presented to the annual session of the National People’s Congress which opens in Beijing next week.
The politburo also said that the government will seek a balance between stabilizing growth and economic structural adjustment, pushing for deleveraging, destocking, cutting costs and closing excess production capacity, according to the CNR report.
The government will be creative when managing the economy and step up targeted measures to create a stable environment for structural reform, it said.
The world’s second-largest economy grew 6.9% in 2015, the weakest in 25 years, although some economists believe real growth is even lower.
Capital Outflow
The Chinese have been moving money abroad at record levels as China’s economy continues to slow, boosting real estate prices around the world while raising concerns.
In places like New York, Miami and London, Chinese investors are dominating the market for land and buildings, especially in the luxury sector.
But the flight of money has caused concerns in Beijing, which recently began a clampdown that could impede the overseas investments.
Forex Watch List
China has said it would launch a system to monitor foreign exchange businesses at banks, and that people trying to purchase more than the maximum $50,000 in foreign currency a year would be placed on a watch list.
Another obstacle may be China’s recent stock market volatility, which has left potential buyers with less cash on hand to buy property.
Terrence Oved, a lawyer with Manhattan real estate and commercial litigation firm Oved & Oved LLP, said, “With respect to many of the Chinese investors, the Chinese stock market fluctuation and the downward pressure has eliminated the paper gains of a lot of these Chinese foreign investors that has allowed them to go shopping in New York, Miami and elsewhere in the United States.”
He said many buyers are adopting a wait and see approach to the Chinese economy.
US Banks React
Some large banks are also becoming more cautious regarding Chinese investors. International banking giant HSBC announced last month it would no longer provide mortgages to some Chinese nationals, who are already dominating real estate markets abroad. HSBC–Europe’s biggest lender–has not clarified which specific clients would be impacted by the new rules.
But while HSBC has introduced new rules that could restrict purchases, other banks are jumping in to fill the void.
The Royal Bank of Canada said it would ease its cap on mortgages to buyers without a local credit history. In the US, some Chinese are investing in real estate development projects to qualify for the EB-5 visa program, which gives foreign nationals green cards in exchange for investing in projects that employ 10 or more people. Real estate buyers are also drawn to the economic stability, education and rule of law of US and European markets.
