China to take steps to stabilize economic activity, bring economy back to normal track
China will adopt a package of measures to stabilize economic performance, in an effort to get the economy back to normal track and keep major economic indicators within an appropriate range, according to a decision made at the recent State Council's Executive Meeting chaired by Premier Li Keqiang.
Noting the increasing downward pressure on the economy and the serious difficulties facing many market entities, the meeting stressed the need to stay confident, respond resolutely, fully apply the new development philosophy and coordinate COVID response with economic and social development with high efficiency.
The decisions of the Central Economic Work Conference and the policies set out in the Government Work Report must be implemented faster and more forcefully. In keeping with the overall thinking and policy orientation, a host of targeted, strong and effective measures for range-based regulation will be taken to keep economic fundamentals stable.
"Power generation, freight volume and bank loans have all declined since April. Without a certain level of GDP growth, stable employment cannot be realized. One good thing is that we refrained from excessive money supply and mass stimulus in the past few years, and we still have policy tools in reserve," Li said.
The meeting decided to implement 33 measures in six aspects which mainly include fiscal and related policies to keep the operation of market entities and employment stable. The policy of refunding outstanding and newly added value added tax (VAT) credits will be extended to more industries, which is expected to increase tax refunds by 140-plus billion yuan and bring the total amount of tax relief this year to 2.64 trillion yuan.
The policy of deferred premium payments of old-age, unemployment and workplace safety insurance programs by micro, small and medium-sized enterprises (MSMEs), self-employed households and companies in the five hard-hit sectors (namely catering, retail, tourism, civil aviation, and highway, waterway and railway transportation) will be prolonged till the end of this year, and extended to other industries facing serious difficulties. As a result, the deferred payment this year will reach 320 billion yuan.
The subsidy for retaining employees under unemployment insurance will be extended to all hard-hit enterprises participating in the scheme. Greater support such as social insurance contributions subsidies will be provided to MSMEs that hire college graduates. Localities should scale up support to micro and small businesses and self-employed households in terms of utility bills and rentals, among others.
Funds from this year's local government special bonds shall be basically utilized by the end of August, with their scope of support extended to new infrastructure and other projects. The re-guarantee business of the national financing guaranty fund will be increased by more than one trillion yuan this year.
The meeting decided to take a string of financial policies. The scale of the support facility for inclusive loans to micro and small businesses, and its share of the increase in the loan balance will both be doubled this year.
Banks will be supported in deferring, within this year, principal and interest repayments on loans made to MSMEs and self-employed households, truck loans, and home loans and consumer loans borne by individuals facing temporary difficulties. Banks and centrally-managed auto companies will work together to defer by six months the principal and interest repayments of the 90-billion-yuan car loans extended by the auto companies.
The payment period of commercial acceptance bills will be cut from one year to six months. Platform companies will be encouraged to list on domestic and overseas markets in accordance with laws and regulations.
"For China, development is the basis and key for resolving all problems. We must efficiently coordinate COVID response with economic and social development and better use the experience we gained in the past two years. Policy support must be beefed up, and policy measures should be swiftly rolled out wherever needed, to keep major economic indicators within the appropriate range and ensure stable overall economic performance," Li said.
The meeting adopted measures to stabilize industrial and supply chains. The policies to enable early re-opening of enterprises and their full-capacity production will be fine-tuned. Service for white-listed enterprises will be improved.
Freight logistics will be kept smooth. Restrictions on the passage of trucks from low-COVID-risk areas will be lifted and all undue height limits and arbitrary charges scrapped. Non-local drivers of passenger and cargo vehicles will have equal access to free COVID testing as local residents.
An additional 150 billion yuan of emergency loans will be provided to the civil aviation industry, and the air transport industry will be supported in issuing 200 billion yuan of bonds. Domestic and international passenger flights will be increased in a well-paced manner, and measures will be formulated to facilitate the travel of foreign companies' employees.
Consumer spending and effective investment will be boosted. Car purchase restrictions will be relaxed. The purchase tax of passenger vehicles will be partially cut to the amount of 60-plus billion yuan on a time-limited basis. City-specific policies will be adopted to meet people's basic housing needs and their wish to improve housing conditions.
Government approval procedures will be improved. A number of infrastructure projects will get off the ground, including water conservancy facilities, especially large-scale irrigation facilities, transportation facilities, renovation of old residential communities, and multi-purpose utility tunnels. Banks will be encouraged to provide long-term loans on a sizable scale.
A new round of rural road construction and renovation will be launched. The issuance of 300 billion yuan of railway construction bonds will be supported. More will be done to promote public works programs.
Energy security will be ensured. Local governments must fulfill their responsibilities for maintaining coal output. The policy for approving higher production capacity of coal mines will be re-calibrated, and procedures for designating coal mines especially important for energy supply will be accelerated. A number of new hydro-power and coal-fired power projects will start this year.
The meeting stressed the imperative to ensure basic livelihood. Support must be provided for people eligible for unemployment benefits and subsistence allowances and people facing difficulties. The mechanism of raising social benefits pro rata with price increase will be promptly activated should the situation require.
"All localities and departments must have a stronger sense of urgency and work earnestly to ensure policy implementation. Relevant departments need to flesh out each and every measure in the aforementioned policy package, and announce and deliver them as soon as possible," Li said. "The State Council will conduct accountability inspections on local governments' execution of policy measures for stabilizing the economy. Local authorities should promptly introduce policies for stabilizing economic activity tailored to local conditions."