China moves to steady economic activity

SURGE IN SUPPORT This May 13, 2022 photo shows employees at the workshop of the Anhui Electric Power Transmission and Transformation Co. Ltd. in Hefei, in China’s eastern Anhui province. XINHUA PHOTO

BEIJING: China will adopt dozens of growth-stabilizing measures aimed at getting its economy back on track and keeping major economic indicators within a range it deems appropriate after a recent State Council executive meeting led by Chinese Premier Li Keqiang was held.

The meeting came after the country’s leaders noted the increasing downward pressure on the Chinese economy and the difficulties faced by many market entities. During the meeting, the need to stay confident, respond resolutely, fully apply the newly developed development philosophy and coordinate the country’s Covid-19 response with economic and social development efficiently was stressed.

The decisions of the Central Economic Work Conference and the policies set in the Government Work Report must be implemented faster and more forcefully, according to the meeting. In keeping with overall thinking and policy orientation, targeted, strong and effective measures for range-based regulation are expected to be taken to keep economic fundamentals stable.

“Power generation, freight volume and bank loans have all declined since April. Without a certain level of GDP (gross domestic product) growth, stable employment cannot be realized,” Li said.

“One good thing is that we refrained from excessive money supply and mass stimulus in the past few years, and we still have policy tools in reserve,” he added.

The meeting decided to implement 33 measures in six aspects, which include fiscal and other related policies to keep the operation of market entities and employment stable. The policy of refunding outstanding and additional value-added tax credits will be extended to more industries, which is expected to increase tax refunds by more than 140 billion yuan and bring the total amount of tax relief this year to 2.64 trillion yuan.

Premium payments postponed

Postponing premium payments of old-age, unemployment and workplace safety insurance programs by micro, small and medium-sized enterprises (MSMEs); and self-employed households and companies in five hard-hit sectors — catering, retail, tourism, civil aviation, and highway, waterway and railway transportation — will be extended until the end of this year. This will also be extended to other industries facing difficulties. As a result, the deferred payment this year is estimated to reach 320 billion yuan.

Subsidies for retaining employees under unemployment insurance will be extended to hard-hit enterprises participating in the scheme. Greater support, such as social insurance contribution subsidies, will be provided to MSMEs that hire college graduates. Local governments should increase support to micro and small businesses and self-employed households in terms of utility bills and rentals, among others.

Funds from this year’s local government special bonds shall be used before September, with their scope of support extended to new infrastructure and other projects. The re-guarantee business of the national financing guaranty fund will be increased by more than 1 trillion yuan this year.

The meeting also decided to implement several financial policies. The scale of the support facility for inclusive loans to micro and small businesses, and its share of the increase in the loan balance, will be doubled this year.

Banks will be supported in deferring, within this year, principal and interest repayments on loans made to MSMEs and self-employed households; truck loans; and home and consumer loans of individuals facing temporary difficulties. Banks and centrally managed automobile companies will work together to defer by six months the principal and interest repayments of the 90-billion-yuan car loans extended by carmakers.

The payment period of commercial acceptance bills will be cut from one year to six months. Platform companies will be encouraged to list on domestic and overseas markets in accordance with laws and regulations.

“For China, development is the basis and key for resolving all problems. We must efficiently coordinate [our] Covid response with economic and social development and better use the experience we gained in the past two years,” Li said.

“Policy support must be beefed up, and policy measures should be swiftly rolled out wherever needed, to keep major economic indicators within the appropriate range and ensure stable overall economic performance,” he added.

Stabilizing chains

Measures to stabilize industrial and supply chains were also adopted. Policies allowing enterprises to reopen and resume production will be fine-tuned, and services for white-listed businesses will be improved.

Freight logistics will be kept smooth. Restrictions on the passage of trucks from low-Covid-risk areas will be lifted and all undue height limits and arbitrary charges scrapped. Nonlocal drivers of passenger and cargo vehicles will have equal access to free Covid testing as local residents.

An additional 150 billion yuan in emergency loans will be extended to the civil aviation industry, and the air transport sector will be supported by issuing 200 billion yuan of bonds. Domestic and international flights will be added, and measures designed to facilitate the travel of foreign firms’ employees.

Consumer spending and effective investment will be bolstered. Car-purchase restrictions will be relaxed. The purchase tax of passenger vehicles will be partially cut to more than 60 billion yuan on a time-limited basis. City-specific policies will be adopted to meet people’s basic housing needs and improve housing conditions.

State-approval procedures will be improved. Several infrastructure projects will get off the ground, including water conservancy, large-scale irrigation and transportation facilities; renovation of old residential communities; and multipurpose utility tunnels. Banks will be encouraged to provide long-term, sizable loans.

New rural road construction and renovation will be launched. The issuance of 300 billion yuan of railway construction bonds will be supported. More will be done to promote public works programs.

Energy security will be ensured. Local governments must fulfill their responsibilities to maintain coal output. The policy for approving higher production capacity of coal mines will be recalibrated, and procedures for designating coal mines, especially important for energy supply, will be accelerated. A number of new hydro-power and coal-fired power projects will start this year.

The meeting stressed the importance of ensuring citizens’ basic livelihood. Support must be provided for people eligible for unemployment benefits and subsistence allowances, as well as those facing difficulties. The mechanism of raising social benefits pro rata with price increases will be activated if needed.

“All localities and departments must have a stronger sense of urgency and work earnestly to ensure policy implementation. Relevant departments need to flesh out each and every measure in the aforementioned policy package, and announce and deliver them as soon as possible,” Li said.

“The State Council will conduct accountability inspections on local governments’ execution of policy measures for stabilizing the economy. Local authorities should promptly introduce policies for stabilizing economic activity tailored to local conditions,” he added.

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