NATION INTENSIFIES DRIVE TO STIMULATE RECOVERY
Policymakers provide support for millions of businesses
China is stepping up efforts to spur a rapid economic rebound from the novel coronavirus pandemic. Policymakers in the world’s second-largest economy are mobilizing capital and resources to help those affected by the outbreak, ensuring that millions of businesses are adequately equipped to handle the impact.
Research by China Daily shows that since the outbreak emerged in December, a series of measures have been adopted by the govern-medium-sized ment to support the resumption of production and reopening of businesses — including the introduction of fiscal, monetary, financial and trade policies.
The research involved a comprehensive analysis of policy documents issued by ministries and commissions in the past two months. It found that the most frequently mentioned keywords in the documents were “small and enterprises”, “resumption of production”, “protecting supply chain stability”, “employment protection” and “preferential tax policies”.
A series of support measures, especially those aimed at reducing interest rates, extending debt rollovers, renewing loans and providing specific credit lines for SMEs to resume production, are mentioned many times by several bodies, including the National Development and Reform Commission, the Ministry of Finance and the State Administration of Taxation.
Preferential policies have also been announced for specific industries. For example, the Internet Plus concept has been highlighted — a reference to the application of the internet and other information technology in conventional industries.
Policymakers have suggested that enterprises make full use of China’s rapidly developing internet services, accelerate digitalization and promote consumption upgrades.
The services sector and laborintensive manufacturing have been severely affected by restrictions imposed on public movement during the outbreak.
The research found that policies announced for SMEs have been targeted especially for these industries, while many others, such as civil aviation, wholesale and retail, tourism, internet technology and agriculture, are also covered.
For example, one specific measure includes the provision of favorable interest rates for companies significantly affected by the pandemic.
Other measures include assigning government orders to logistics and transportation companies to carry materials to fight the virus, and encouraging migrant workers in cities to return to their hometowns to start businesses to provide employment support for farmers in rural areas.
The People’s Bank of China, the central bank, will use monetary policy tools — such as open market operations — to release sufficient liquidity into the market, and to keep interest rates stable. New loans reached nearly 7 trillion yuan ($988 billion) in the first quarter of this year as part of financial support to shore up the economy, the bank said.
Efforts will be made to speed the issuance and use of local government special bonds to support effective investment, with priority given to regions with major projects and low risk. By the end of last month, the value of such bonds issued this year totaled 1.08 trillion yuan, a year-onyear rise of 63 percent.
Yu Yongding, a member of the China Finance 40 Forum — a platform for finance policy research and academic exchanges — and also a global council member of the Chinese Academy of Social Sciences, said the country’s policymakers have responded promptly to the health crisis.
“Their priority is to rein in the pandemic, no matter the cost. Because markets cannot function properly in emergencies, the state has to play a decisive role. Fortunately, China’s administrative machinery is functioning effectively,” Yu said.
“The government has also devised ways to help businesses survive the crisis, focusing in particular on SMEs. It has cut taxes, reduced charges and provided generous compensation to hard-hit enterprises. In addition, policymakers have resorted to marketfriendly measures to steer the allocation of financial resources, as well as possibly loosening some financial regulations.”
Yu said that in view of the policies that have been adopted, and the gradual resumption of work and production, consumption could quickly bounce back after the outbreak.
The research also analyzed some key economic indicators, including the consumer price index, or CPI, and the purchasing managers’ index, or PMI.
The country’s CPI — a main gauge of inflation — has risen overall since the outbreak, but consumers bought less clothing in the first quarter compared with the same period last year. Property transactions also fell.
Last month, the PMI exceeded 50 in both the manufacturing and nonmanufacturing sectors. A reading above 50 indicates expansion, while one below this mark reflects contraction. The reading for last month shows that the pandemic prevention and control situation continues to improve, production is resuming, life is returning to normal and economic development is moving in a positive direction.
With most consumers remaining at home to prevent the virus spreading, demand for online shopping and services has soared, making the digital economy a new driving force.
In January and February, demand surged for e-commerce, and online education, entertainment, telemedicine and others services, China Daily’s research found.
Meanwhile, policies have been put forward to promote the digital transformation of key industries. Construction of new digital infrastructure will be accelerated to assist the development of the fifth generation of cellular technology, or 5G, data centers and the industrial internet.
Many analysts have voiced confidence in the prospects for the Chinese economy despite the potential for short-term slowdowns during the outbreak.
Gu Qingyang, an associate professor at the Lee Kuan Yew School of Public Policy at the National University of Singapore, said that by tackling the coronavirus crisis effectively and taking strong action, China has provided stability and security for the normal operations of global industrial and supply chains.
The use of a range of policies to enhance its advantages in both chains has allowed the country to provide a large quantity of anti-virus materials to international organizations and more than 100 countries, Gu said.
He added that China’s emerging infrastructure construction — with 5G technology, big data and artificial intelligence as the core — will provide important support for new industrial and supply chains.
Takashi Kodama, head of the Economic Research Department at the Daiwa Institute of Research Group, based in Japan, said China has made noteworthy progress in its economic recovery.
He said that if the country’s private sector, which has been less affected by the deterioration of the global economy, can recover quickly, it will give hope to other nations and provide a much-needed boost to financial markets worldwide.
China has also taken steps to stabilize foreign trade and investment — injecting renewed confidence into globalization, which it continues to believe in despite mounting skepticism in some countries, Kodama said.
“Overall, China is telling the world that its economy is sufficiently resilient to withstand the impact of the coronavirus,” he added.