China to loosen monetary policy for 1st time in 14 years

China will adopt an “appropriately loose” monetary policy next year, marking its first easing in 14 years, along with a more proactive fiscal policy to stimulate economic growth.

The move, announced on Monday by the Politburo – a top decision-making body of the ruling Communist Party, aims to expand domestic demand and boost consumption.

The announcement, ahead of the annual Central Economic Work Conference, led to a jump in stocks and a rally in government bonds, with Hong Kong’s Hang Seng index climbing 2.8 per cent to its highest in a month.

China’s economy has struggled this year, prompting aggressive monetary easing measures in September, including interest rate cuts and a 1 trillion yuan ($140 billion) injection into the financial system. The new policy stance is seen as a response to potential tariff threats from US President-elect Donald Trump, who has proposed significant tariffs on Chinese imports.

President Xi Jinping emphasised the need for full preparation to achieve 2025 economic targets, acknowledging the challenges ahead. The focus will be on stabilising the housing and stock markets, with further stimulus measures expected to support economic growth.

Credit: Reuters

Subediting: Y.Yasser