(April 28): China’s top leaders pledged to counter external shocks and enhance energy security, while highlighting better-than-expected growth so far this year after the Iran war caused turmoil in global energy markets.
China will “respond to external shocks and challenges in a systematic way, enhance the level of energy and resource security, and counter various uncertainties with the certainty of high-quality development,” the Communist Party’s decision-making Politburo led by President Xi Jinping said in its first economy-focused meeting after the war in Iran broke out.
While announcing no new measures, the meeting largely reaffirmed existing policy commitments, including a promise to maintain ample liquidity and keep the currency “basically stable.”
The economy has gotten off to a strong start, with key indicators surpassing expectations, according to an official readout published by the Xinhua News Agency on Tuesday. That showed the economy’s “powerful resilience and vitality” even though it still faces “certain difficulties,” it said.
The Politburo’s message was among the most direct acknowledgements of the risk facing China from a war now in its third month. The US and Iran agreed to a ceasefire around April 7 but hostilities may resume if they fail to agree to fresh talks, with the Trump administration now considering Tehran’s proposal to end the conflict.
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The reassuring rhetoric marks a shift for officials in Beijing compared with a year ago, when they stepped up preparedness in the face of US tariffs as high as 145%. Back then, policymakers pledged to ready emergency plans and announced a new tool that was eventually used to boost investment.
“Policymakers sound confident,” said Michelle Lam, Greater China economist at Societe Generale SA, adding that there was “nothing significant” that came out of the meeting.
China has suffered limited spillovers so far from a conflict that triggered a global energy crisis. Growth rebounded more than expected in the first quarter, with Beijing’s years-long efforts to strengthen energy security helping to avert severe disruptions in March.
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Still, an extended blockade of the Strait of Hormuz poses a serious threat to the world’s No 2 economy. In addition to pinching supply, high oil prices could weigh on consumption globally and hurt Chinese exports, a key growth engine in recent years.
The Politburo called for “targeted and effective” deployment of fiscal and monetary policies, and pledged to “tap deeply” into the potential of domestic demand by expanding the supply of high-quality goods and services.
China’s leadership also highlighted the need to promote technological self-reliance and foster “independent and controllable” supply chains.
Officials called for building major infrastructure projects, and vowed to step up the construction of various grids and networks related to everything from water and electricity to computing capacity and telecommunications.
For now, upbeat first-quarter results will allow Chinese policymakers to wait and assess the situation before rolling out additional stimulus. The government has already boosted public spending and infrastructure investment in 2026, supporting growth.
Expectations for further monetary easing declined as the oil shock lifted the inflation outlook. Economists at Goldman Sachs Group Inc no longer forecast a reduction in interest rates this year, even as many still expect a cut to banks’ reserve requirement to ensure abundant market liquidity to absorb government bond sales.
Uploaded by Evelyn Chan
