State investment in strategic industries leaps 30%, Lian Ping calls for maintaining active fiscal policy

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A round-up of the top economic and financial headlines in the Chinese press as of 5 October, 2023.

Investment by central state-owned enterprises in strategic emerging industries rises roughly 30% (Xinhua News Agency

Data from the State-owned Assets Supervision and Administration Commission (SASAC) of the State Council indicates that from January to August this year, central state-owned enterprises made investments in strategic emerging industries of more than 840 billion yuan, for a year-on-year increase of about 30%. 

Strategic emerging industries represent the direction of a new scientific and technological revolution and industrial transformation. They are key areas for the nation to cultivate new development momentum and win new advantages in future competition. As the “new force” in China’s economic development, SASAC is pushing central enterprises to accelerate their efforts in strategic emerging industries.

Does China still have room for active fiscal policy?: Lian Ping (Diyi Caijing

(Lian Ping (连平) is the former chief economist of big state-owned lender Bank of Communications, and the current chair of the China Chief Economists Forum.)

At present, China’s economy is continuing to recover, but the foundation for recovery is not yet solid, endogenous demand is insufficient, and confidence and expectations remain unstable.

In order to achieve economic stabilization and recovery as soon as possible, macroeconomic policies have been actively implemented since the start of the year, fiscal policy has stepped up to improve efficiency, and monetary policy has continued to adjust countercyclically. Overall, the basic theme has been one of expansion. 

The Politburo meeting held on July 24 called for the precise and effective implementation of macro-adjustments, strengthening counter-cyclical adjustments and policy reserves, intensifying macro-policy efficiency and paying more attention to relevance.

In order to continue to effectively expand domestic demand and promote the stable and healthy recovery of the economy, fiscal policy will still play a very critical and positive role.

The question that the market is generally concerned about is whether there is still room for expansionary fiscal policy.

At present, proactive fiscal policies need to continue to improve efficiency, make effective use of the direct mechanism for fiscal funds, reasonably accelerate the progress of fiscal expenditures, comprehensively improve the efficiency of fund payments, achieve policy relevance and continuity, and continue to make efforts from multiple areas.

Mid-Autumn Festival shows market confidence (People’s Daily)

During this Mid-Autumn Festival and National Day vacation, “travel” has become a high-frequency term. 

The latest data shows that the sixth day of the vacation is estimated to have seen 56.697 million passenger trips via rail, road, water and air, for a year-on-year increase of 58.4%. 

The Ministry of Transport predicts that with an overall recovery in commercial travel via rail, road, water and air, the number of cross-regional passenger trips will reach 2.05 billion, for a daily average of 257 million, and an average daily increase of 11.5% over the same period in 2019.

China still a “magnet” for foreign capital, the pace of opening remains unchanged (Guangming Daily)

During the Mid-Autumn Festival, nearly 40 representatives of multinational companies visited the Xiongan New Area to explore fresh development opportunities harboured by this city of the future. 

At nearly the same time, the China Council for the Promotion of International Trade established a bridge with more than 20 multinational companies, organising a delegation to visit the city of Hefei in Anhui province to communicate face-to-face with local government officials on cooperation and business opportunities.

As China’s economy and society return to normal operation, such scenes appear frequently in many provinces.

Since the start of this year, executives from multinational companies have made intensive visits to China, and foreign investment in China has continued to expand in depth and breadth. 

Tesla’s new energy storage super factory will start construction in Shanghai, Starbucks is expanding at an average rate of one new store in under 9 hours, and Danfoss’s new global R&D and testing centre has commenced operation in Tianjin…Business negotiations, cooperation orders, and project starts confirm that China remains a hot spot for foreign investment.

Ministry of Commerce responds to EU’s invstigation into Chinese EV’s (Xinhua News Agency

In response to the European Union’s decision to launch an anti-subsidies probe into electric passenger vehicles imported from China, a spokesman from the Ministry of Commerce responded on 4 October that the European side initiated this investigation based solely on subjective assumptions about so-called subsidy projects and threats of damage. 

The spokesperson said the investigation lacks sufficient evidence and is inconsistent with relevant WTO rules, and that China expresses strong dissatisfaction with this. The EU has also required that China conduct consultations within a very short period of time and failed to provide effective consultation materials, which has seriously damaged China’s interests.

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