China’s Premier Li says stimulus now ‘more forceful’ than 2020
CHINA has rolled out “more forceful” economic policies this year than it did in 2020, Premier Li Keqiang said, as he warned the country faces an arduous task in ensuring its recovery.
Li was speaking during a Monday (Aug 29) meeting of the State Council, China’s cabinet, where he added that the size of stimulus in 2022 has been “reasonable” and “appropriate”, according to reports from state broadcaster CCTV and the official Xinhua News Agency.
The economy was affected by unexpected factors in the second quarter, Li said, reiterating a pledge to stabilise employment and prices. He also said policies that have been announced so far need to be implemented, so as to keep the economy running within a reasonable range.
Beijing last week announced a 19-point stimulus plan - which included more than 1 trillion yuan (S$202 billion) worth of funding largely intended for infrastructure spending - in its latest bid to bolster growth.
The economy faces several challenges as it continues to grapple with a severe property sector slump, as well as Covid outbreaks and restrictions that have hampered consumer and business confidence. The southern technology hub of Shenzhen locked down some parts of its districts this week, as did areas around Beijing. Power cuts due to a brutal heat wave have also complicated the recovery.
An official survey of manufacturing activity to be released Wednesday will likely show a contraction in August, according to the median forecast in a Bloomberg poll of economists. That would be the second straight month of contraction.
Economists were relatively downbeat on the stimulus measures announced last week, including an announcement that local governments would be urged to use up more than 500 billion yuan in existing special bond ceiling limits by the end of October. That amount was smaller than the 1.5 trillion yuan some analysts had expected.
The gap may be due to a lack of shovel-ready projects that can absorb that full amount, analysts at consultancy Trivium China wrote in a note.
They added that another 1 trillion yuan worth of special bond quota that is estimated to remain unused could be unleashed around October, so as to provide local governments with funding for the first quarter of next year. BLOOMBERG
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