China poised to unleash market demand for stronger growth amid external uncertainties

Amid the COVID-19 pandemic and external complexities and uncertainties, China is maneuvering its policy toolkit to bolster demand from its very large domestic market to revive the economy for stronger growth.

At a high-level meeting last week, Chinese leaders analyzed the current economic situation, stressing that macroeconomic policies should play a proactive role in stimulating demand. Fiscal and monetary policies should be able to effectively compensate for insufficient social demand.
“Taking into account both immediate and long-term benefits, policies have emphasized efforts to further increase domestic demand, stimulate the vitality of market entities and foster new engines of growth,” said Wang Yiming, deputy director of the China Center for International Economic Exchanges. .

The meeting noted that the use of local government special bonds should be optimized and local governments should be encouraged to make proper and proper use of the special debt quota.

Special purpose bonds play a vital role in catalyzing investment and promoting the construction of a modern infrastructure system, Vice Finance Minister Xu Hongcai said.

In the first half of the year, Chinese local governments issued 3.41 trillion yuan (about $504.2 billion) in new special bonds, which provided support for more than 23,800 projects, according to official data. .

It was also stressed at the meeting that monetary policy should help maintain an appropriate and adequate supply of liquidity, increase credit support for businesses and make good use of new policy bank lending and funding. for infrastructure projects.

Last month, the country’s central bank helped two political banks raise up to 300 billion yuan through the issuance of financial bonds to fund the country’s major projects.

“Such policy-backed and development-oriented financial instruments can ease the pressure on project capital and at the same time guide financial institutions to provide more favorable financing, an official from the National Commission said. Development and Reform (NDRC).

As the upward trend of economic recovery consolidates further, companies will have a bigger appetite for funding, said Zou Lan, an official with the People’s Bank of China.

Since March, outbreaks of COVID-19 have hit consumption hard and caused a decline. However, the country’s consumer goods retail sales regained vitality and reversed the downward trend to climb 3.1% year-on-year in June, thanks to effective prevention and control measures. epidemic and the adoption of a series of policies aimed at stimulating consumer spending.

Restaurant owners, retailers and other businesses sensitive to COVID-19 have been offered lower rents and platform commissions, as well as greater financial support. Local governments distribute billions of yuan in vouchers and grants to support local spending.

Purchases of big-ticket items such as automobiles are also heating up as policymakers work out details of a stimulus package, including cutting the tax on car purchases to help the industry that plays a vital role in the stimulation of demand.

Auto sales in the country rose 23.8 percent year-on-year in June, rebounding from a three-month streak of declines, official data showed.

Besides consumption, the government has also strengthened measures to further ensure smooth logistics and the flow of goods transportation to stabilize industrial and supply chains.

By 2035, the country basically aims to build a modern national road network that is extensive, fully functional, efficient, green, smart and safe, according to a plan unveiled by the NDRC in July.

“The construction of national roads will continue to play a key role in stimulating effective investment and stabilizing the broader economy,” NDRC spokesman Meng Wei said.
Source: Xinhua

Comments are closed.