China’s central bank is ramping up monetary support to help boost the country’s economic recovery, with investment set to impact in the fourth quarter, according to Yi Gang, governor of the People’s Bank of China (PBOC).
“China’s monetary policy will stay accommodative to support the real economy,” Yi said in an interview at the recent Hong Kong Monetary Authority’s Global Financial Leaders’ Investment Summit.
Yi said the central bank is supporting investment in capital expenditure and infrastructure projects, which is expected to boost the country’s fourth-quarter economic performance. The central bank is also injecting more liquidity into the economy, lowering financing costs and offering structural support to areas such as housing, agriculture, small businesses and green development.
“The central bank is supportive of the healthy development of the real estate sector, and sales and lending in the sector have seen marginal improvement,” Yi said. “With ongoing urbanization in China, we hope the housing market can achieve a soft landing.”
The Chinese economy “remains broadly on track and can maintain a reasonable potential growth rate thanks to the continuous urbanization and rising demand of middle-income consumers, which will keep the purchasing power and value of the renminbi stable”, Yi said.
Zhou Maohua, an analyst at China Everbright Bank, told the China Daily website that increased lending to help businesses upgrade equipment will boost investment in the manufacturing and infrastructure sectors.
Growth in manufacturing investment is set to accelerate to 11.7% year-on-year, up from 10.1% in the first three quarters of 2022, Zhou said, although he said more support is needed to sustain the recovery in domestic demand and help local authorities stabilize local housing markets.
The Ministry of Industry and Information Technology’s latest figures showed that China has maintained its status as the world’s largest manufacturer. It accounted for nearly 30% of global manufacturing output in 2021, up from 22.5% in 2012.
Commenting on the figures, Pan Helin, co-director of the Digital Economy and Financial Innovation Research Center at Zhejiang University’s International Business School, said “the transformation and upgrading of manufacturing is playing a vital role in promoting China’s high-quality development”.
China pledges more support for self-employed people
As part of its drive to boost the economy, the Chinese government has pledged more help for self-employed people by improving the business environment, and promoting employment and entrepreneurship.
On top of that, efforts will also be made to lower the burden on small firms and self-employed businesses, helping them with financing and stimulating consumer demand, said Guo Qimin from the National Development and Reform Commission.
Guo was speaking at a press conference to unveil a new government regulation designed to help self-employed businesses by, among other things, protecting their legal rights and interests.
Pu Chun, deputy head of the State Administration for Market Regulation, said the regulation included practical and effective measures. He said, local governments should, according to the new regulation, provide more business premises, while reducing the cost of renting them. “To advance the development of self-employed businesses is to support the real economy,” said Pu.
To cushion the impact of the Covid-19 pandemic and the slowdown in the world’s economy, China has targeted the small business help for smaller businesses and the self-employed. From 2020 to the end of September this year, tax and fee cuts for self-employed businesses reached nearly 1.03 trillion yuan ($142.9 billion).
More than 80% of China’s self-employed businesses are free from taxes, according to Dai Shiyou, an official with the State Taxation Administration.
“By the end of September 2022, China had 111 million registered self-employed businesses, accounting for two-thirds of the country’s market entities, official data showed. Nearly 90% of these are in the services sector, while over 30% have engaged in new businesses like online streaming and e-commerce,” Dai said.