MACRO: Beijing endeavours to stabilize national economy
No concrete measures have been disclosed, but the meeting has set a strong tone and sent a loud message that Beijing will be striving to rescue the country’s economy from the impact of the coronavirus.
“China will adopt greater macro-economic efforts to counter the impact of the pandemic, among which are an active fiscal policy, a higher government budget deficit, issuing special government bonds for the fight against the virus (and) raising the issuance quota for local government bonds for specific uses,” the post on the central government website stated. The Bureau comprises the top leaders of the Communist Party of China.
The other measures highlighted in the post included “lower cash deposit reserve ratios, lower interest rates, and refinancing to guarantee reasonable and abundant capital flow in the market.” The meeting also promised lower loan or financing interest rates to support the physical economy and medium, small- and micro-sized enterprises, according to the post.
To stabilize the Chinese economy, the country’s governing party calls for proactively inspiring domestic demand from individual consumers as well as from all levels of government, advocating measures such as upgrading old residential housing, promoting infrastructure construction, and helping traditional industries to evolve and new industries to expand.
As for enterprises, medium- and small-scale firms – many of which are privately-owned – should be aided via various means such as taxation and fee reduction, and lower financing costs and rents.
As for industries, the government should guarantee food supply at steady prices, continue with the battle against pollution, and stick to the principle that “housing is for living, not for speculative trading” to maintain a stable and healthy property market order.
China usually only discloses detailed development plans for the year after its two top political sessions convene in March with all the top governing officials attending. However, for 2020 the two sessions have been delayed by the virus, and no definite revised schedules have been released by Beijing as of now.
China’s economy had been hit hard by the COVID-19 contagion, with this year’s January-March quarter GDP having posted the first year-on-year decline – 6.8% – since the country’s National Bureau of Statistics began officially releasing the quarterly economic growth data in 1992.
“The first quarter had been unusual, and the sudden outbreak of the virus had delivered an unprecedented blow to China’s economy. However, as of now, most of the economic, social and industrial orders have been more or less restored, and our economy has shown great resilience,” the post commented, adding that the virus has incubated many new business models and industries.
Written by Hongmei Li, li.hongmei@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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