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China Prioritises Stable Growth; Continued Scrutiny of Private Capital

The shift of China’s top economic goal in 2022 to stabilise growth is likely to moderate concerns over regulatory shocks in the corporate sector as the government refines industry policies to avoid economic disruptions, says Fitch Ratings. Strict supervision and scrutiny of private capital, however, is likely to become a new norm, with the aim of directing capital to the state-encouraged areas.

China’s politburo required regulators at all levels to ensure smooth running of the economy in 2022 at December’s Central Economic Work Conference, which outlines the government’s top economic goals for the coming year. The policymakers are likely to accelerate infrastructure investments as a key economic stabiliser, and bolster domestic consumption while overseas demand remained uncertain.

The conference addressed concerns over further policy headwinds after intense regulatory shocks in 2021. For example, the politburo clarified that economic development would still be prioritised under the “common prosperity” initiatives, and wealth sharing would be mainly realised through a distribution system that favour the employed as well as improved public services.
Source: Fitch Ratings

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