China’s top leaders say economy doesn’t have enough ‘domestic’ momentum

BEIJING – China’s top leaders told a regular meeting on Friday that domestic demand remains insufficient, according to state media.

The assessment came after China reported Better than expected GDP growth of 4.5% in the first quarter, which led several investment firms to raise their economic forecasts for the year.

“Currently, the positive turn in China’s economy is mainly a recovery. Domestic drivers are not yet strong and demand is still insufficient,” said a state media readout of the Chinese-language meeting, translated by CNBC.

“Economic transformation and upgrading face new resistance, and the promotion of high-quality development still needs to overcome many difficulties and challenges,” the reading said.

Chinese President Xi Jinping chaired Friday’s meeting of Chinese leaders, known as the Politburo.

The meeting also called for boosting people’s sources of income and improving employment, especially for college graduates.

The unemployment rate for people aged 16-24 rose to 19.6% in March, near an all-time high recorded in July 2022. Overall unemployment for people in cities has remained much lower, above of 5%.

The reading from the meeting does not indicate much change in fiscal and monetary policy, said Bruce Pang, chief economist and head of research for Greater China at JLL.

The meeting focused more on promoting consumption and stabilizing investment, he said, noting that the comment about the lack of “domestic” momentum focuses on private sector soft investment and opportunities to enhance it.

The Politburo meeting also specifically called for further development of new energy vehicles, the construction of battery charging stations and the transformation of power grids.

On artificial intelligence, the authorities said China should “attach importance” to “general” AI, create an environment for innovation, and pay attention to risk prevention.

In the first quarter, the popularity of the ChatGPT artificial intelligence chatbot skyrocketed, prompting many companies in China to double down on similar products. Public communications so far have focused on business clients instead of the public.

Beijing opened the draft rules on AI-generated content for public comment this month.