China is set to adopt a raft of policy measures to boost the country’s economic recovery, according to the State Council, which discussed the proposals at a recent executive meeting chaired by Premier Li Qiang.
The meeting explored the introduction of measures to grow effective demand, bolstering the real economy and mitigating risks in key economic sectors.
It was noted at the meeting that China’s economy is experiencing a gradual, with the implementation of earlier policy measures facilitating a recovery in market demand, a continuous increase in production and supply, and overall stability in prices and employment.
However, it also noted that the external environment and the sluggish global economic conditions were having a direct bearing on China’s economic recovery.
“The meeting called for efforts to keep abreast of the shifting economic situation. More vigorous measures must be taken to strengthen drivers of development and improve the economic structure, so as to sustain the sound momentum of the economic upturn,” the China Daily website reported.
“The meeting stressed that effective policy steps should be rolled out without delay and delivered on the ground as fast as possible. On top of this, the reserve of policy measures will be scaled up. The comprehensive effect of relevant policies should be brought out to the greatest extent.”
The decisions were made after the latest statistics from the National Bureau of Statistics showed that major economic indicators for May, including fixed-asset investment, industrial output and retail sales, all posted slower year-on-year growth than that in the previous month.
At the same time, the People’s Bank of China, the country’s central bank, cut the interest rate on its one-year medium-term lending facility by 10 basis points to 2.65% for the first time in 10 months.
It was also decided at the State Council meeting that financing for technology-based enterprises should be increased. Financial institutions will be encouraged to further develop products and services for high-tech enterprises to meet their needs at different stages of development.
The also said the channelling of support to high-tech start-ups will be prioritised. Financing support and risk prevention will be better coordinated to effectively maintain financial stability.
The meeting adopted the draft version of the Regulation on Supervision and Administration of Private Investment Funds, in an effort to better protect the legitimate rights and interests of investors and promote the standardized and healthy development of the sector.
China’s three major economic indexes saw moderate growth in May, slightly missing market expectations, with industrial output rising 3.5% and retail sales expanding 12.7% on a yearly basis.
Fixed-assets investment also slowed mainly due to the real estate sector, where investment in the first five months of the year declined 7.2% on a yearly basis, extending the 6.2% fall registered in the January-April period.
“We can’t deny that China’s economy is firmly making headway in its recovery trajectory, despite factors exerting a drag on the process, which is natural,” Lian Ping, chief economist and head of the Zhixin Investment Research Institute, told the Global Times.
“Efforts to unleash domestic demand and stabilize market expectations and confidence are crucial for the economic rebound at present, and stimulus packages should aim in this direction,” Lian said.
Li Daokui, director of Tsinghua University’s Academic Center for Chinese Economic Practice and Thinking, said there is still huge potential for domestic economic growth.
“There are two key ways to boost confidence. One is to introduce policies to boost consumer confidence as soon as possible, while the other is to stimulate investment by private enterprises by offering reassurance to them,” Li said.
More taxpaying entities
The number of new taxpaying market entities grew in May, another sign that the Chinese economy continues to recover.
A total of 1.52 million new market entities handling tax-related business were registered in May, an increase of 24.9% from the same period last year, data from the State Taxation Administration showed.
In May, newly registered companies numbered about 691,000, a rise of 27.1% year-on-year, while the number of new individual businesses stood at about 817,000, up 33.7% from a year ago.
In the first five months, the total number of new taxpaying market entities was nearly 6.44 million, up 15.5% year-on-year.