China unveils 33-point package to support economy
Factory activity PMI at 49.6 in May as against 47.4 in April; govt to halve purchase tax for small-engined cars
China's cabinet announced a package of 33 measures covering fiscal, financial, investment and industrial policies on Tuesday to revive its pandemic-ravaged economy, adding it will inspect how provincial governments implement them.
The stimulus package, which was flagged by China's State Council in a routine meeting last week, underscores Beijing's shift towards growth, after Covid-19 control measures pounded the economy and threaten Beijing's 5.5% growth target for the year.
To revive investment and consumption, the government ordered localities not to expand curbs on auto purchases and said those which already have curbs in place should gradually increase their quotas on car ownership.
The ministry of finance also said on Tuesday that it would halve the purchase tax for small-engined cars.
China will promote healthy development of platform companies, which are expected to play a role in stabilising jobs, the State Council said.
Platform companies are also encouraged to make breakthroughs in areas including cloud computing, artificial intelligence and blockchain technologies, the State Council said, the latest sign that China is easing a crackdown on e-commerce platforms and tech giants.
China will also expand private investment, accelerate infrastructure construction and stimulate purchases of cars and home appliances to stabilise investments,
Platform companies are also encouraged to make breakthroughs in areas including cloud computing and artificial intelligence
according to the measures.
Struggling factories
China’s factories still struggled in May, but the slower pace of contraction suggests that the worst of the current economic fallout may be coming to an end. The official manufacturing purchasing managers index rose to 49.6 from 47.4 in April, according to data released by the National Bureau of Statistics on Tuesday.
A reading below 50 still indicates a contraction, but the gauge was better than the median estimate of 49 in a Bloomberg survey of economists.
The non-manufacturing gauge, which measures activity in the construction and services sectors, increased to 47.8 from April’s 41.9, above the consensus forecast of 45.5.
Capital markets
In terms of monetary and financial policies, China will boost financing efficiency via capital markets, by supporting domestic firms to list in Hong Kong, and promote offshore listings by qualified platform companies. The State Council also vowed to further reduce real borrowing costs, and strengthen financial support for infrastructure and major projects.