China’s State Council Unveils Follow-up Round of Stimulus Policies

The State Council has unveiled a fresh round of stimulus policies, for the purpose of stabilising the Chinese economy amidst the uncertainty created by the Covid pandemic and heightened geopolitical tensions.

Premier Li Keqiang convened a regular meeting of the State Council on 24 August, to outline a raft of policy measures to extend the effects of economic stimulus policies first introduced at the end of May.

The meeting outlined a total of 19 “follow-up policies” that include:

1. An additional quota of 300 billion yuan in policy development financial instruments, on the foundation of 300 billion yuan that have already been applied to projects. The effective usage of over 500 billion yuan in special government bonds, and the completion of issuance prior to October. The State Council said that this will be of benefit to using investment to drive consumption and dealing with the problem of insufficient demands for loans, while also reducing the cost of enterprise financing and personal consumer loans.
2. The approval for work to commence on a round of infrastructure projects with “mature conditions.” The State Council said that the projects must be “efficient, maintain quality, and prevent misappropriation of funds.” The State Council will also unveil measures to support development and investment by private enterprises, and expedite the ongoing healthy development of Internet platform economies. Local governments will be permitted to flexibly apply lending policies, to rationally support inelastic housing demand as well as demand for housing improvements, and make it more convenient for commercial personnel to leave and enter different jurisdictions.
3. The easing of administrative fees for another quarter, and encouraging local governments to establish risk compensation funds for loans made to micro, small and medium-sized enterprises and individual industrial and commercial registrants.
4. Supporting central state-owned power enterprises and other companies in the issuance of 200 billion yuan in special bonds to guarantee power supplies. The issuance of another 10 billion yuan in agricultural subsidies, on top of the 30 billion yuan that have already been issued since the start of 2022.
5. Ongoing focus on ensuring the smooth operation of logistics.
6. Implementation of the policy that the “central government drives, local government is responsible.” Central government authorities will promptly issue policy rules, with local governments to then unveil accompanying policies.

The State Council said that the Chinese government would continue to “strive to consolidate the foundations for economic recovery and development” while also “refraining from flood-style stimulus or overdrawing the future.”

The Chinese central government will also allocate 10 billion yuan from its budget to drought relief for Sichuan province and the Yangtze River region.