China’s new macroeconomic policies to aid in recovery

CHINA w i l l modest ly ra ise its budget def icit rat io, issue specia l sovereig n bonds a nd bolster t he sca le of loca l gover nment bonds as pa r t of a slew of macroeconomic policies to cope wit h impacts of t h e C o v i d-19 p a n d e m i c , according to a decision made at a key meeting of t he Communist Par t y of China (CPC) on Fr iday.

The meeting of the Political Bureau of the CPC Central Committee, presided over by CPC Central Committee secretary-general Xi Jinping, underlined the importance of further macro policy adjustment and better implementation to counter impact from the outbreak.

Proactive fiscal policy must be more effective and prudent monetary policy must be more flexible and accommodating to cut interest rates for loans and maintain reasonably sufficient liquidity, said a statement released after the meeting.

The meeting also called for adequate implementation of various tax and fee cut policies and an acceleration of the issuance and use of special bonds issued by local authorities.

It is important to give play to the guiding role of financial policies, such as re-lending, rediscounting and deferrals of principal repayments and interest repayments of loans, while ensuring a smooth transmission mechanism and alleviating difficulties and high costs faced by businesses in their financing processes, the statement said.

The meeting called for quicker steps to unleash demand from domestic markets, including measures to enable various markets like shopping malls to get back to normal.

It is important to expand consumer consumption, modestly increase public spending and restore consumption at physical stores while maintaining the vitality of online shopping, the statement said.

It added that the accelerated spread of the pandemic overseas has hit the global economy and trade hard, and the country is faced with mounting pressure from the importation of infected cases and fresh challenges in the resumption of industry chains.

The priority for the country is to prevent both the importation of Covid-19 cases and a possible domestic rebound of the outbreak, and to maintain the sustained positive momentum in epidemic containment, the statement said.

It required unremitting measures in epidemic control and prevention in key areas and more targeted treatment for patients in severe condition to improve the recovery rate and lower the mortality rate.

Authorities in Hubei province must step up alignment with relevant provincial authorities to help its residents leave the province for jobs – and stranded travellers in the province return home. Epidemic containment in key areas, such as Beijing, must be further reinforced, the statement said.

T he meet i ng c a l le d f or stronger care and support for Ch i nese c it i z ens over sea s, say ing t hat diplomat ic missions abroad must enhance c onsu la r protec t ion, g u ida nce a nd support in terms of prov iding protect ive materia ls to ensure t heir healt h and sa fet y.

It is imperative that authorities closely monitor and analyse the trend of the pandemic, identify and control sources of risk in a precise and speedy manner, step up quarantines at ports and refine border entry procedures, the statement said.

With the Covid-19 outbreak bringing fresh difficulties and challenges, more arduous efforts are needed in poverty alleviation, the statement said.