The Politburo met yesterday and pushed out an announcement that China "will continue to maintain the continuity and stability [of its stimulus policies]".
This little one-liner has been interpreted by analysts as a promise, ahead of the National People’s Congress annual plenum on March 5, that the government will continue its fiscal stimulus policies and its loose monetary policy throughout the year.
The South China Morning Post notes that the announcement came after the US decided to raise its interest rates last week – the first major sign that countries may be starting to unwind their stimulus measures.
"The [Chinese] economy has not yet recovered to the desired level and the government still needs to work on the ‘three chariots’ of our economy – exports, domestic consumption and investment," said Wei Jie, an economist at Tsinghua University, to the SCMP.
But it’s also pretty clear that the government has put measures into place to prevent overheating in the economy. New restrictions have been placed on mortgages, and the almost unbelievable flow of bank loans last year has been cut off.
Stephen Green, an economist at Standard Chartered, has declared the stimulus has come to an end, and put out a note saying that "it looks like the budget’s role in stimulating the economy is more or less back to normal".
"China’s stimulus measures were more akin to a blunderbuss than a sniper’s bullet; everything that could be done, was done. A massive new wave of infrastructure projects were approved (only partially funded through the budget), a tsunami of bank credit was allowed to flood into the economy, the property sector was stimulated with a heavy cocktail of borrowing and tax cuts, and the MoF ramped up spending. Now we see policy moving towards moderation on all of these fronts," he writes.
By his calculations, China’s "fiscal impulse", which he measures by gauging the change in the budget balance over time, rose to 7% at the height of the stimulus last year, but has now fallen back down to 2%.
So again, what is the message from the Politburo? Perhaps that while life has returned to normal, there is no need for panic.