Against the backdrop of the COVID-19 pandemic and external complexities and uncertainties, China is maneuvering its policy toolkit to bolster the demand of its super-large domestic market to perk up the economy for stronger growth.
At a high-profile meeting last week, Chinese leadership analyzed the current economic situation, stressing that macro policies should play a proactive role in boosting demand. Fiscal and monetary policies should be able to effectively offset deficiency in social demand.
"Taking both immediate and long-term benefits into consideration, the policies emphasized efforts to expand domestic demand further, spur the vitality of market entities, and foster new growth drivers," said Wang Yiming, deputy head of the China Center for International Economic Exchanges.
Staff members of a local bank promote financial services at a farmers' market in Nan'an District of southwest China's Chongqing Municipality, Aug. 2, 2022. (Xinhua/Huang Wei)
BOOSTING INVESTMENT
The meeting noted that the utilization of special local government bonds should be optimized and local governments should be encouraged to make adequate and good 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, said Vice Minister of Finance Xu Hongcai.
In the first half of the year, local governments in China issued 3.41 trillion yuan (about 504.2 billion U.S. dollars) worth of new special bonds, which offered support to over 23,800 projects, official data showed.
It was also stressed at the meeting that the monetary policy should help maintain a proper and adequate liquidity supply, increase credit support for enterprises, and make good use of new loans from policy banks as well as their funding for infrastructure projects.
Last month, the country's central bank supported two policy banks to raise up to 300 billion yuan via financial bond issuance to fund the country's major projects.
"Such policy-backed and development-oriented financial instruments can ease the capital strain of projects and at the same time guide financial institutions to provide more supportive financing," an official from the National Development and Reform Commission (NDRC) said.
As the upward trend of economic recovery further consolidates, enterprises will have a bigger financing appetite, said Zou Lan, an official from the People's Bank of China.
People visit the Kunming Dounan Flower Market in Kunming, southwest China's Yunnan Province, July 12, 2022. (Xinhua/Chen Xinbo)
PUSHING UP DEMAND
Since March, COVID-19 flare-ups hit consumption hard and caused a decline. However, the country's retail sales of consumer goods regained vitality and reversed the declining trend to climb 3.1 percent year on year in June, thanks to effective epidemic prevention and control measures and the adoption of a raft of policies to spur consumer spending.
Restaurant owners, retailers, and other businesses susceptible to COVID-19 have been offered lower rents and platform commissions, as well as stronger financing support. Local governments are handing out billions of yuan in vouchers and subsidies to shore up local spending.
Purchases of big-ticket items such as automobiles are also warming up as policymakers flesh out details for a stimulus package, including slashing the car purchase tax to help the industry that plays a critical role in boosting demand.
Auto sales in the country expanded 23.8 percent year on year in June, rebounding from a three-month declining streak, official data showed.
In addition to consumption, the government has also strengthened measures to further ensure the smooth flow of logistics and circulation of freight transportation to stabilize the industrial and supply chains.
By 2035, the country aims to basically build a modern national road network that is extensive, fully functional, efficient, green, intelligent, 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," said NDRC spokesperson Meng Wei.
