China hints at bringing in a stimulus package to support its faltering economy

• China's top leaders said late Monday that they'd move to support the country's struggling economy.
• The Politburo acknowledged a stimulus package would be needed to deal with "new difficulties and challenges".

China's leaders have pledged to bring in new measures to support the country's faltering economy, which is currently battling stagnant growth and soaring youth unemployment.

Beijing's top decision-making body the Politburo said late Monday that it would launch its stimulus package "with precision and force" to boost demand, according to Xinhua.

"China's economy is facing new difficulties and challenges, which mainly arise from insufficient domestic demand, difficulties in the operation of some enterprises, risks and hidden dangers in key areas, as well as a grim and complex external environment," the state news agency also quoted the Politburo as saying, after a meeting chaired by President Xi Jinping.

Data released last week showed that China's GDP growth fell short of forecasters' predictions and the rate of unemployment among 16- to 24-year-olds surged to 21% in the second quarter of 2023.

The country's economy has also been plagued by a property-market crisis ever since embattled developer Evergrande missed its scheduled debt repayments in 2021.

The Politburo had been expected to conclude its July meeting later this week, so Monday's hints of a stimulus package surprised markets.

Hong Kong's Hang Seng index had jumped over 4% by Tuesday's closing bell, with the CSI 300 climbing 3% and the Shanghai Composite up 2%.

The renminbi also rose 0.6% to just over 7.14 per dollar, while crude oil benchmarks held steady after racking up gains the previous three trading sessions.

Beijing still isn't expected to bring in so-called "big bang" measures to revive growth – but its acknowledgement of the economy's struggles Monday likely cheered investors by setting the tone for fiscal and monetary stimulus, according to analysts.

The Politburo shared "a growth-supportive message that explicitly recognizes many of the pain points in the economy – including some in an unusually direct fashion," UBS Global Wealth Management CIO Mark Haefele said in a research note seen by Insider.

"Though few concrete details were revealed and the language falls short of bazooka-style stimulus measures, we think the tone taken is positive," he added.