- Chinese stocks rose on Tuesday morning as Beijing promised measures to bolster China’s booming economy.
- On Monday, China’s top leaders pledged to increase policy support to boost domestic consumption as the post-COVID recovery has been slower than expected.
- China’s second-quarter GDP grew 6.3% from a year ago, missing market expectations of 7.3%.
Tourists on the Bund on July 11, 2023 in Shanghai, China.
Vcg | Visual China Group | Getty Images
Chinese shares rose on Tuesday as Beijing promised to step up measures to bolster China’s booming economy.
Hong Kong’s Hang Seng Index rose more than 3%, China’s tech-heavy ChiNext gained 1.8% and the Shanghai Composite Index gained 1.81% on Tuesday morning in Asia.
Chinese property developers Country Garden and Longfor rose by 14.3% and 20.7% respectively. Sunac rose 12.5%, China Vanke rose 11.02% and China Overseas Land and Investment grew 11.39%.
A day earlier, Chinese property shares fell on renewed debt fears. The Chinese government cracked down on property sector debt levels in August 2020.
The stock rally comes after China’s top leaders on Monday pledged to increase political support to boost domestic consumption as the post-Covid recovery has been slower than expected.
According to official data, China’s gross domestic product in the second quarter rose 6.3% from a year ago, underperforming the 7.3% economist forecast. This was growth of 0.8% from the first quarter, and was slower than the 2.2% from quarter to quarter in the period January to March.
China’s top leaders met on Monday for the much-anticipated Politburo meeting and hinted at moves to “adjust and optimize” property policy in what the leadership called a “painful” economic recovery.
State news agency Xinhua quoted the 24-member Politburo as saying “the economy is facing new difficulties and challenges.” This is mainly due to weak domestic demand, operational challenges for companies as well as “a gloomy and complex external environment”, it said.
“The meeting emphasized the need to actively expand domestic demand, give full space to consumption’s fundamental role in driving economic growth, expand consumption by increasing citizens’ income,” according to Xinhua.
“It is necessary to increase the consumption of cars, electronic products and home furnishings, and promote the consumption of services such as sports, leisure and cultural tourism,” the report states.
Hong Kong-listed shares of internet giants rose on Tuesday. Alibaba shares rose 4.7%, while Tencent was up nearly 4%. Meituan and Baidu shares were higher by 5.7% and 6.8% respectively.
In the electric car area, Xpeng rose 11%, Li Auto rose 4.15% and BYD rose 2%.
“This is confirmation that [Chinese] Policymakers have heard the market’s concern about more support needed for the domestic economy,” Xiaolin Chen, head of international at KraneShares, said on CNBC’s “Street Signs Asia” on Tuesday.
“They want to reach the target of 5% of GDP this year. The first job they need to do is to create jobs for the labor force in China,” Chen said.
“I certainly see some encouraging language released from the statement that removed a lot of the concerns of people who have a high focus on the real estate market, employment, private investment and so on. So far the language has been encouraging.”