Beijing Unveils Raft of Fiscal and Credit Measures to Stabilise Chinese Economy

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The Chinese central government has unveiled a raft of fiscal and financial measures to help stabilise the macro-economy amidst uncertainty created by COVID-19 and heightened geopolitical tensions.

On 25 May China’s State Council convened a teleconference on “stabilisation of the broader national economy,” in response to the “ongoing expansion of downwards pressure on the Chinese economy.”

The State Council called for “making the stabilisation of growth the outstanding priority, striving to protect market entities in order to protect employment and livelihoods; protecting the resilience of the Chinese economy, and endeavouring to ensure that the economy achieves rational growth in the second quarter and that unemployment rates decline as soon as possible.”

The State Council outlined a total of 33 economic policies and measures across six areas, for which related by-laws will be released prior to the end of May. The Council also dispatched inspection teams to 12 provinces on 26 May, to supervise implementation of policies and undertaking of related projects.

The Measures include:

  • A more than 1.4 trillion yuan increase in tax rebates.
  • Loosening of vehicle purchase restrictions.
  • Stage-based reduction in the levying of some passenger vehicle purchase taxes, worth 60 billion yuan.
  • A doubling of the 2022 financial inclusion micro-and-small enterprise support tool quota and support ratios.
  • Extension of deferrals for the payment of social welfare fees by micro, small and medium-sized enterprises across five industries including food and beverage, and expansion to other industries affected by the pandemic. The policy is expected to result in the deferral of 320 billion yuan in payments.
  • Support for the issuance of 300 billion yuan in railway development and other bonds.

The Chinese government is currently in the process of accelerating the release and implementation of related policies. On 25 May Chinese authorities released several related measures including:

  • The “Opinions Concerning Further Invigourating the Existing Stock of Assets and Expanding Effective Investment” (关于进一步盘活存量资产扩大有效投资的意见) by the State Council.
  • The “Notice Concerning Making Full Use of Fiscal Policy Guidance to Support the Financial Sector in Supporting Market Entities to Alleviate Difficulties and Develop” (关于发挥财政政策引导作用支持金融助力市场主体纾困发展的通知) by the Ministry of Finance.
  • The “Notice On Measures in Relation to Central State-owned Enterprises Helping Small and Medium-sized Enterprises to Alleviate Difficulties and Expediting Coordinated Development” (关于中央企业助力中小企业纾困解难促进协同发展有关事项的通知) by the State-owned Assets Supervision and Administration Commission.