Targeted policies instill confidence Chinese economy can withstand test

The performance of large-scale industrial enterprises in May suggests that as long as China can prevent the novel coronavirus virus from staging a large-scale comeback in the country, its economy is capable of withstanding the test of the pandemic.

Industrial enterprises, whose annual main business revenue is more than 20 million yuan ($2.83 million) — China’s statistical threshold for largescale enterprises — saw their overall profit in May increase 6 percent from the same period last year, hitting 582.34 billion yuan, the National Bureau of Statistics said on Monday.

While that growth would have been viewed as mediocre in other years, it is clearly something quite remarkable given what has unfolded this year. Not only did that uptick put an end to the decline over the preceding four months, more importantly it was achieved while the COVID-19 pandemic was gathering pace worldwide.

Given that the combined profit of these enterprises had fallen 4.3 percent year-on-year in April, their performance in May is an encouraging sign, as it heralds that the recovery of the world’s second-largest economy is gaining momentum.

Although these enterprises’ profit over the first five months this year was still 19.3 percent lower than the same period last year, the marked growth in May has helped narrow that gap by 8.1 percentage points compared with that of the first four months.

That pickup in the performance of large-scale industrial enterprises in China is testimony to the effectiveness of the series of pro-industry policies rolled out by governments at various levels, and how well-targeted these measures have been.

Great importance has been placed on reducing industrial and business operation costs, improving the business environment and public services, and stabilizing employment and finance, and stimulating consumption, innovation and production, and the performance of large-scale industrial enterprises in May suggests these policies are now beginning to pay off.

With the easing of the pandemic situation in some major economies in Europe and Asia also boding well for the positive momentum being sustained, there is growing confidence that international collaboration can start to revive the global supply chains.

Now consistency of policies — to boost domestic demand, spur the flow of investment into the real economy, particularly small businesses and innovations, and increase people’s incomes — can help China better cushion the impacts from any internal or external shocks.

As such, while strengthening its macro-economy and financial policy coordination with other countries, China will continue to carry out its prudent and pragmatic stimulus packages.

That Chinese policymakers have not resorted to quantitative easing measures, or negative interest rate as their counterparts in the United States and Japan have, demonstrates their strategic composure, foresight and confidence in the resilience of the Chinese economy.