CHINA’S ruling Communist Party vowed to study measures to digest the nation’s housing stockpile, in a move that could alleviate the property crisis, and hinted at a willingness to cut rates.

The world’s second-largest economy will “make flexible use” of tools to step up support for the economy and lower overall borrowing costs, a meeting of the 24-member decision-making body led by Chinese President Xi Jinping agreed, according to a Tuesday (Apr 30) readout from the official Xinhua News Agency.

Those tools include interest rates and the reserve requirement ratio, which determines the amount of cash banks must set in reserve, according to the statement. Top officials said monetary policy should be “prudent” while fiscal policy should be “proactive.”

“The message was rather supportive, acknowledging that the economy has improved but policy needs to avoid ‘tightening and easing’ to strengthen the recovery,” said Societe Generale Greater China economist Michelle Lam.

Xi will convene senior party officials in July for a delayed, closed-door conclave that will be closely watched for signs of long-term reforms, according to the statement.

The group’s April meeting is closely watched for signals of shifts in economic policy. The Politburo typically meets three times a year to discuss the economy. Such closed-door conclaves have become more important since Xi shifted more economic decision-making out of government bodies and into party groups to consolidate power.

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The Politburo called for faster issuance of special sovereign bonds as well as local government special bonds, which are a major source of funding for infrastructure projects. That came after fiscal support in the first quarter slowed from a year ago measured by fiscal deficit as a percentage of the economy.

The meeting reaffirmed a pledge to expand domestic demand and highlighted it will ensure good implementation of a consumer product trade-in and equipment upgrade programme.

Another focus was advancing “new productive forces,” a slogan that refers to technology and emerging industries. Leaders vowed to make advanced preparation to develop future sectors and step up support for strategic technology.

China’s economy grew 5.3 per cent in the first quarter blowing past economist expectations and boosting confidence in the government’s ability to meet its ambitious annual GDP growth target of about 5 per cent.

That momentum trailed off in March, leading economists to call for more stimulus to counteract a deepening housing crisis and weak domestic spending. China is also facing criticism over its cheap exports in sectors such as electric vehicles, which the US and European Union say are a symptom of industrial overcapacity. BLOOMBERG