China's Economic Roadmap: Steering Through Deflationary Pressures

China's top leadership is pledging to support the nation's economy, currently facing various risks, by managing disorderly competition and increasing capacity cuts in key industries. Leaders aim to reign in price wars amidst expectations of factory capacity cuts to counter deflation. The news was reported by the official news agency, Xinhua, following a Politburo meeting.

The Politburo's meeting, which sets the economic agenda for the rest of the year, highlighted stability in employment, companies, and market expectations. Analysts suggest limited urgency in introducing new stimulus measures, focusing instead on long-term supply-side measures. President Xi Jinping also addressed the need to break the cycle of 'involution' within businesses, promoting proactive fiscal measures and technological support.

China's economy grew 5.2% in the second quarter, slightly ahead of predictions, yet domestic demand remains weak. Despite growth, deflationary pressures and a potential property downturn pose ongoing challenges. Policymakers advocate for leveraging domestic demand and technological advancement to stabilize the economy. China's leadership will deliberate on a new five-year plan at an upcoming plenum, focusing on economic modernisation amidst complex global changes.

(With inputs from agencies.)