Politburo Meeting Signals Policy Shift, Focus on Domestic Demand and Emerging Pillar Industries

The Political Bureau of the CPC Central Committee held a meeting on July 30 to analyze the current economic situation and arrange economic work for the second half of the year. The meeting readout showed that macro policy language shifted from “making full and good use” to “strengthening force and effectiveness”, and reintroduced the phrase “intensify counter-cyclical adjustment” for the first time in six months. New quality productive forces such as the construction of the “six networks”, Artificial Intelligence Plus, and emerging pillar industries were placed in a more prominent strategic position. The capital market wording was upgraded from “stabilizing confidence” to “improving resilience and confidence”.

On the fiscal policy front, the meeting called for accelerating the pace of fiscal expenditure and the use of bond funds, and vigorously advancing the construction of the “two priorities” and “two new initiatives”. As of July 29, the issuance progress of new special-purpose bonds stood at about 55%, and that of central government bonds at about 50%, both slightly slower than the same period in 2025. Over the remaining five months of the year, the outstanding new issuance quota for government bonds exceeds RMB5.7 trillion, implying average monthly supply of over RMB1.1 trillion. Regarding monetary policy, the meeting mentioned “comprehensively use and timely adjust monetary policy instruments”, which mainly refers to structural monetary policy tools such as re-lending facilities, with a view to further accelerating their deployment and efficiency through optimized implementation. In addition, “optimize the implementation of fiscal-financial coordination policies to boost domestic demand” could mean that the RMB100 billion special fund for this purpose, introduced at the start of the year, will be optimized in terms of issuance or usage going forward.

To expand domestic demand, the meeting proposed adapting quality supply to the consumption needs of different groups, tapping the potential of service consumption, and explicitly called for solid progress in the planning and construction of the “six networks”.

This meeting was the first time the Politburo stressed the need to “focus on building emerging pillar industries” at this level. The industrial policy deployment was structured on three tiers: artificial intelligence is the top priority; emerging pillar industries and future industries serve as the cornerstone, with the wording upgraded from “cultivate” to “focus on building”, signalling stronger investment and resource allocation; and the unified national market and the fight against “involutionary” competition will determine the environment and quality of industrial development. New quality productive forces, including AI, cutting-edge technologies, and emerging pillar industries, will be key areas of industrial policy support in the second half of the year.