Beijing to Accelerate Release of Follow-up Economic Stabilisation Measures

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The Chinese central government says it will hasten the release of follow-up measure to stabilise the economy, amidst a renewed round of Covid-related lockdowns.

At a State Council press conference held on 5 September, officials from the Chinese central bank, the Ministry of Finance (MOF), the National Development and Reform Commission (NDRC) and the Ministry of Commerce (MOFCOM) outlined follow up measures for the “raft” of economic stabilisation policies previously outlined in May and August.

Officials said that upcoming policies and measures would seek to “fully unleash policy effects and expand effective demand.”

MOF official Ou Wenhan (欧文汉) said that the authority would make greater use of special bond funds, seek to alleviate the difficulties of enterprises and individual industrial and commercial registrants, support the effective use of policy development financial tools, and drive the orderly implementation of key projects.

As of the end of August local governments in China had issued 3.52 trillion yuan in special bonds, for a sizeable increase compared to previous years. Local authorities also completed issuance of the full quota of project-related bonds.

MOF has included new infrastructure and clean energy projects within the scope of support for local government special bonds, in order to “better employ the role of special bonds in driving the expansion of effective investment”.

The Politburo and the State Council have also arranged for MOF to guide the use of more than 500 billion yuan in the special bond spare quota (专项债务结存限额), and the issuance of new special bonds to support the development of major projects, support “qualified provinces” in the completion of economic and social development targets, and stabilise economic recovery.

Ou said that the “special bond spare quota” is the gap between the special bond balance and the quota, and is mainly used by local governments to control debt risk levels.

“It is the quota gap that is formed by strengthening fiscal budget management, arranging for the use of fiscal funds to repay maturing special bonds, and reducing the special bond balance,” Ou said.

Ou said that the spare 500 billion yuan in the local government debt quota could be used for the issuance of new special bonds to support transit infrastructure, energy projects, forestry and hydrological projects and cold chain development.

“At the same time, we will actively research appropriate increases in the areas for investment of special bond funds, and expanding the project capital scope of special bonds, in order to better employ the role of special bonds in driving effective investment,” Ou said.

NDRC official Yang Yinkai (杨荫凯) highlighted the State Council’s recent proposal to increase the policy development financial instrument quota by more than 300 billion yuan, while at the same time making use of the 500 billion yuan in the special bond spare quota.

“These are key measures for expanding effective investment under current conditions,” Yang said.

With regard to policy development financial instruments, Yang said that NDRC will “adopt vigorous measures to drive these funds to create real work volumes as soon as possible”, while also driving the establishment of “coordination mechanisms to advance key projects for effective investment”

With regard to effective use of local government special bond quota worth over 500 billion yuan, Yang Yinkai said that NDRC had already arranged for local governments to produce a new list of preparatory projects for this year. NDRC has provided feedback on the projects to regional authorities, and submitted them to MOF and the Chinese central bank.

“In combination with certain projects that have not been deployed from the previous list for this year, overall we will be able to complete the issuance of over 500 billion yuan [in special bonds],” Yang said.

“The next step will be for us to accelerate the development and implementation of projects, make use of investment as soon as possible, and drive coordination between investment from the central government budget, local government special bonds and policy development financial instruments.

“At the same time, we will actively guide social capital to participate in the development of major projects, expedite stable growth of investment, and continually consolidate the trend of economic recovery and improvement.”

MOFCOM official Li Fei (李飞) said that the authority would support exports of key products such as clean energy vehicles, and continue to work with relevant departments to support clean energy companies in the accelerated development of overseas sales and post-sales services networks.

“We will encourage the overseas branches of qualified Chinese banks to provide offshore consumer finance products; research the expansion of export channels, and deliver new energy vehicles via the China-Europe Railway Express.”

MOFCOM will work with other departments to issue policies to support the development of offshore warehousing for the cross-border operations of Chinese logistics enterprises and e-commerce platforms, and create new cross-border e-commerce trial areas and trials for market procurement and trading methods.

MOFCOM will also unveil policies to attract foreign investment and drive domestic consumption.