A mechanical arm is in operation at an automobile manufacturing factory in Qingzhou, Shandong province, on Aug 27, 2022. (Photo / IC)
Experts laud new incremental policies, expect more stabilizing macro support
China is stepping up efforts to implement a package of stimulus measures to bolster the slowing economy, which experts said showcases the government's firm determination to encourage growth this year.
The State Council's executive meeting chaired by Premier Li Keqiang on Wednesday decided that China will further implement stimulus policy measures and make implementation rules to apply the measures early this month, with a key focus on expanding effective demand, spurring investment and stabilizing employment so as to consolidate the foundation for recovery
Citing a recently announced series of new incremental policies, they said the strength of China's stimulus policy measures so far this year has approached those launched in 2020, and they expect to see more efforts to boost macro policy support in the coming months.
Their remarks came as the State Council's executive meeting chaired by Premier Li Keqiang on Wednesday decided that China will further implement stimulus policy measures and make implementation rules to apply the measures early this month, with a key focus on expanding effective demand, spurring investment and stabilizing employment so as to consolidate the foundation for recovery.
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On the basis of making full use of a new quota of $300 billion yuan ($43.5 billion) in policy-backed and developmental financial tools, the country will further replenish capital for eligible mature projects to satisfy their funding needs. New projects started in the first half will also be supported. And policy bank financing tools will also be used to fund the renovation of aging residential communities and the construction of provincial-level expressways, according to the meeting.
It was also decided to send more task forces to certain localities to supervise and assist in various activities in a bid to promote the implementation of stimulus policies for stabilizing growth.
Ming Ming, chief economist of CITIC Securities, said the meeting stressed expanding effective investment and adopting reform measures to boost market vitality and further reduce government-imposed transaction costs for market entities.
"Government departments and State-owned enterprises will play a crucial role in stabilizing growth in the second half. Sending a new batch of task forces highlights policymakers' firm determination to stabilize the economy this year," Ming said.
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Last week, the State Council, China's Cabinet, announced 19 follow-up measures to the policy package aimed at stabilizing the economy, including a new quota of around 500 billion yuan in local government special bonds to be fulfilled before the end of October. That was on top of a package of 33 measures unveiled in May.
Wen Bin, chief economist at China Minsheng Bank, said the country is now at a critical juncture for realizing an economic rebound, and called for more efforts to strengthen the foundation for recovery.
A private survey, which focused on small and export-oriented businesses, showed on Thursday that China's factory activity contracted for the first time in three months in August, as power cuts and temporary factory closures weighed on output and sales.
The Caixin China General Manufacturing Purchasing Managers' Index fell from 50.4 in July to 49.5 in August, media group Caixin said on Thursday.
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Wang Zhe, senior economist at Caixin Insight Group, attributed the contraction to COVID-19 resurgences coupled with extreme weather in some parts of China.
Wang said the economy is still slowly recovering from COVID-19 shocks in the first half.
Considering the COVID-19 situation and harsh weather, Wang called for further subsidies and assistance for poor and low-income groups amid a sluggish job market and shrinking consumer demand.
Meanwhile, the country's top economic regulator said the country will ramp up more efforts to accelerate self-reliance in science and technology and foster a complete system for domestic demand.
The National Development and Reform Commission wrote in an edition of Qiushi Journal published on Thursday that it will implement a series of major science and technology programs in cutting-edge fields like artificial intelligence, quantum computing, integrated circuits, biopharmaceuticals and brain science.
In the next step, the NDRC will speed up the implementation of mature projects in fields such as transportation, water conservancy and energy, and accelerate the push for "new infrastructure".