中国观察：四月政治局会议显示持续战略耐心

April Politburo: emergency plans showedcontinued strategic patience 25 April 2025 Politburo meeting pledged to ready emergency plansThe Apr Politburo meeting was held on Apr 25. This was the first meeting after the US GEM EconomicsAsia | China tariff hikes that offered high-level guidance on the pace, scale and focus of additionalpolicy stimulus. In the meeting, top leaders pledged to“fully prepare”emergency plansto cushion external shocks in a readout after a much-anticipated Politburo meeting oneconomic policies. They reiterated their intention to cut interest rates and RRR whenappropriate, pledged to further stabilize the property market, and vowed to supportbusinesses hardest hit by the tariffs. However, they appeared to have dialed down theurgency of rolling out large-scale stimulus now. Helen QiaoChina & Asia EconomistMerrill Lynch (Hong Kong)+852 3508 3961helen.qiao@bofa.com Benson WuChina & Korea EconomistMerrill Lynch (Hong Kong)+852 3508 5047benson.wu@bofa.com The policy stance expressed in the meeting minutes is in line with our expectations,which shows strategic patience against the backdrop of the ongoing trade war. Wemaintain our view that Chinese policy makers would prefer to act only after weighingmore data in the coming months (see report:Downgrading GDP growth forecasts). Anna ZhouChina & Asia EconomistMerrill Lynch (Hong Kong)+852 3508 3909anna.zhou@bofa.com Expanding consumption support: a focus on servicesThe meeting emphasized the need to further support domestic consumption to boost Xiaoqing PiGreater China EconomistMerrill Lynch (Hong Kong)+852 3508 6584xiaoqing.pi@bofa.com overall economic momentum, reinforcing messages from the NPC in Mar and CEWC inDec. Notably, the meeting highlighted the expansion of coverage under consumptiongoods trade-in and large equipment renewal programs, suggesting new fiscal support inthe near term. Services spending was highlighted as a key target area. CEWC: Central Economic WorkConference To stimulate consumption, the Politburo also proposed measures such as increasingincome for middle- and lower- income households and introducing services and elderly-care loans. In our view, today’s meeting sets the stage for the rollout of consumption-oriented fiscal policies later in 2Q, potentially including services subsidies (including ondining-out), as we discussed in our report,Unpacking the potential fiscal stimuluspackage. However, the policy readout omitted any reference to national-level new-bornsubsidies, falling short of expectations. CGB: central government bond LGSB: local government special-purpose bond NPC: National People’s Congress RRR: reserve requirement ratio New measures expected in monetary and property spaceOn monetary policy, top leaders reiterated their intention to“cut RRR and interest rate when appropriate”, sending yet another signal on monetary easing. This is in line withour expectation of a cut to be delivered in the near term. The readout also mentionedsetting up new structural tools as well as policy financing tools in supporting techinnovation, consumption, as well as exports. We expect new reloans/relending tools andother policy bank tools to be activated and utilized in the near term, providing low-costfunding in those areas. On fiscal policy, in line with our expectation, the Politburo called for acceleration inissuance and utilization of the LGSB and ultra-long CGB. After the kickstart of specialCGB issuance on Apr 24, a meaningful pick-up in issuance can be expected in 2Q, beforepotential new allocation of quotas later in the year, in our view. BofA Securities does and seeks to do business with issuers covered in its researchreports. As a result, investors should be aware that the firm may have a conflict ofinterest that could affect the objectivity of this report. Investors should consider thisreport as only a single factor in making their investment decision.Refer to important disclosures on page 3 to 4. On property, in addition to reiteration of reinforcing the urban renewal campaign, thereadout also explicitly mentioned that the government will forcefully and orderlypromote urban village renovation and utilize policies on unsold home buybacks. Weexpect an acceleration in policy implementation in those areas and expansion to morecities and regions. Support exporters that are hit hardest by tariffs On top of those broader growth-support policies, the government reactivated measuresadopted during the pandemic, such as unemployment insurance refunds, to supportthose hit hardest by the tariffs. In addition, the government will boost financing supportfor businesses in difficulty and to better integrate domestic and external trade. Webelieve that policy makers will step up those social security measures if faced with moredifficult labor market conditions in the coming months. DisclosuresImportant Disclosures BofA Global Research personnel (including the analyst(s) responsible for this report) receive com