What to watch at the July Politburo meeting

研报英文原文证据摘录

What to watch at the July Politburo meeting

What they could do

Given the 2Q slowdown, the first step will likely be to deploy existing fiscal measures.

• Budgetary tools: Due to the optimism in April, government bond issuance was delayed, with only RMB6.4tn sold in 1H (Fig

2). With an annual quota of around RMB14tn, about RMB7.5tn remains for 2H. This is about RMB1.3tn more than in 2H25,

equivalent to around 1.8% of 2H GDP.

• Non-budgetary tools: In March, the government announced RMB800bn policy-based financial instruments to support

infrastructure investment, but deployment has been slow. Policymakers could accelerate implementation in the coming

months.

Infrastructure will likely be the focus, particularly projects related to AI and green energy.

• The April Politburo meeting highlighted "six networks", including water networks, new power grids, computing-power

networks, next-generation communications networks, urban underground pipeline networks, and logistics networks.

• Activity is already under way: the RMB77bn Three Gorges new waterway, the first flagship project of the 15th Five-Year

Plan, broke ground on June 8th (link). Bloomberg reported that policymakers are considering investing up to RMB2tn in

data-centre construction over the next five years.

Beyond this, we do not expect major new initiatives in other areas.

• Monetary: We don’t expect any hints on near-term rate cuts.

• Housing: Policymakers will likely stick with incremental easing measures. For example, they could raise lending quotas and

lower borrowing rates under the housing provident fund scheme.

• Consumption: Support measures will be modest too, such as topping up consumer subsidies, offering interest subsidies on

consumer loans, and expanding childcare support.