Chinese stocks rose as Beijing pledged measures to boost the weak economy

Chinese stocks rose on Tuesday as Beijing pledged to step up measures to boost China’s ailing economy.

Hong Kong’s Hang Seng rose more than 3%, China’s tech-heavy Chi Next rose 1.8%, and the Shanghai Composite rose 1.81% Tuesday morning in Asia.

Chinese real estate developers Country Garden and Long Four rose 14.3% and 20.7%, respectively. Sunac rose 12.5%, China Vanke rose 11.02%, and China Overseas Land and Investment rose 11.39%.

A day earlier, Chinese real estate stocks fell on fears of renewed debt. The Chinese government cracked down on the debt levels of the real estate sector in August 2020.

The stock rebound comes after China’s top leaders pledged on Monday to ramp up policy support to boost domestic consumption as the post-Covid recovery was slower than expected.

According to official data, China’s GDP in the second quarter rose 6.3% from a year ago, and performed worse than economists expected at 7.3%. This was 0.8% growth from the first quarter, slower than the 2.2% qoq pace recorded in the January-March period.

China’s top leaders converged on Monday for the long-awaited Politburo meeting and hinted at steps to “adjust and improve” monarchy policy in what the leadership described as a “tormenting” economic recovery.

State news agency Xinhua quoted the 24-member Politburo “The economy is facing new difficulties and challenges,” he said. It added that this was mainly due to weak domestic demand and operational challenges for companies as well as the “gloomy and complex external environment”.

“The meeting stressed that it is necessary to actively expand domestic demand, give full play to the fundamental role of consumption in driving economic growth, and expand consumption through increasing the income of the population,” Xinhua said.

“It is necessary to increase the consumption of automobiles, electronic products and home furnishings, and to promote the consumption of services such as sports, entertainment and cultural tourism,” the report said.

Shares of Hong Kong-listed internet giants rose on Tuesday. Alibaba shares rose 4.7 percent, while Tencent rose 4 percent. Meituan and Baidu shares rose 5.7% and 6.8%, respectively.

In the field of electric vehicles, Xpeng rose 11%, Li Auto rose 4.15%, and BYD rose 2%.

This is a reaffirmation of that [Chinese] Xiaolin Chen, head of international affairs at KraneShares, said on CNBC’s “Street Signs Asia” Tuesday that policymakers have heard the market’s concern about more support needed for the domestic economy.

“They want to achieve the 5% of GDP target for this year. The first action they need to do is create jobs for China’s workforce,” Chen said.

“I definitely see some encouraging words coming out of the statement which removed a lot of the concerns of people who are very focused on the real estate market, employment, private investment and so on. So far, the language has been encouraging.”