China last week announced a series of measures aimed at boosting its economy ahead of a key political bureau meeting later this week focused on reviewing the first-half performance of the world’s second-largest economy.
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China is ramping up measures aimed at boosting its economy ahead of a key political bureau meeting this week that will review the country’s economic performance in the first half.
Last week, the authorities announced a series of pledges targeting specific sectors or intended to reassure private and foreign investors of a more favorable investment environment – but they were quite broad measures, with no specifics.
Chinese leaders have also indicated in recent weeks that they are likely to be prudent and deliberate in supporting their policy.
Here are some of the major measures the Chinese government has issued in recent weeks.
private companies
On Monday, China’s Economic Planning Agency announced a series of measures to encourage private investment.
It follows a rare joint pledge on Wednesday, between the Chinese government and the Communist Party, which pledged to treat private companies like state-owned enterprises. Beijing has also pledged to ensure fair treatment in areas ranging from intellectual property and land rights to finance and labor supply.
In a 17-point statement on Monday, the National Development and Reform Commission pledged to attract more private capital to participate in the construction of major national projects and key industrial supply chain projects.
After making life more difficult for many private companies in recent years, the Chinese leadership has changed tack and made high-profile pledges to improve the business environment.
Julian Evans-Pritchard
Capital Economics
The commission said it would support private investment in sectors such as transportation, water conservation, clean energy, new infrastructure, advanced manufacturing and modern agricultural facilities.
The agency also encourages private investment projects to issue real estate investment funds (REITS) in the infrastructure sector to enhance asset diversification and expand investment and financing channels for private investment.
The People’s Bank of China and the State Administration of Foreign Exchange on Thursday revised its comprehensive financing guidelines to allow companies to borrow more from foreign sources.
Business sentiment in general soured amid lackluster economic growth after China’s initial recovery faltered after emerging from “zero Covid”.
The past three years have also seen severe crackdowns on online platform companies including the e-commerce giant Ali Baba; education and gaming sectors as well as real estate developers.
“After making life more difficult for many private companies in recent years, the Chinese leadership has changed course and made high-level commitments to improve the business environment,” Julian Evans-Pritchard, head of China economics at Capital Economics, wrote in a note on Friday.
“But although parts of the service sector would benefit from a more supportive official stance, much of the current caution among private firms reflects a broader economic headwind against regulatory adjustments of limited use,” he added.
consumption
Last Monday, official data showed that China’s second-quarter GDP grew 6.3% from a year ago, missing market expectations of 7.3%. It posted 0.8% growth QoQ, slower than the 2.2% QoQ pace recorded in the January-March period.
Even with a lower base than last year, due to Shanghai’s Covid lockdown at the time, retail sales growth slowed significantly to 3.1% in June from a year earlier, compared to 12.7% in May.
household goods
Last week, within hours of the commission’s statement, China’s Ministry of Commerce followed up with a joint announcement with dozens of other government departments, announcing an 11-point plan to boost domestic consumption of consumer goods and household services.
This included a directive to local governments to speed up the renovation of older homes, a pledge to encourage improvements on commercial online platforms, and the development of the concept of “15-minute cities”.
Cars and electronics
During a special press conference on Friday, the NDRC released a 10-point plan to increase car ownership, especially for “new energy” cars.
This will include improving the capacity of rural electricity grids, and reducing costs associated with purchasing and charging electric vehicles.
In June, Beijing extended tax breaks for electric vehicle purchases.
