Li Keqiang called on provinces to support growth after consumption and production fell short of expectations.
Chinese Premier Li Keqiang has asked local officials in six key provinces that account for about 40% of the country’s economy to step up pro-growth measures after July data showed consumption and production had increased slower than expected due to Covid lockdowns and the ongoing real estate crisis.
Li told officials at a meeting to take the initiative to help boost consumption and offer more fiscal support through the issuance of government bonds for investment, state television reported. CCTV status Tuesday night. He also pledged to “reasonably” strengthen political support to stabilize employment, prices and ensure economic growth.
“Only when major market entities are stable can the economy and employment be stable,” Li said at the meeting in a front-page article published in People’s Daily. flagship newspaper of the Communist Party.
The meeting came after Monday’s surprise interest rate cut did little to assuage concerns about property and the downturn caused by Covid Zero. Economists warned of even weaker growth and called for additional stimulus, such as further cuts in policy rates and bank reserve ratios and more fiscal spending.
Li acknowledged greater than expected downward pressure from Covid lockdowns in the second quarter and urged local officials to balance Covid control measures with the need to revive the economy. “Only through development will we solve all the problems,” Li said, according to the broadcaster.
Indicating that China may resort to more local debt issuance to revive the economy, Li said that “the balance of local special bonds has not reached the debt limit” and that the country should “activate the ‘debt limit space according to law’, according to the People’s Daily report.
Based on the government budget, local authorities may be able to issue about 1.5 trillion yuan ($221 billion) in additional debt and bonds this year to support infrastructure spending, after top leaders called for better use of the existing debt ceiling limit in July. Politburo meeting. The arrangement could be approved in August, according to some analysts.
China’s 10-year government yield rose for the first time this week, up one basis point to 2.64% from the lowest in more than two years.
Li urged local governments to speed up the construction of projects with strong fundamentals in the third quarter to boost investment, the report said, and also asked officials to increase domestic consumption of big-ticket items such as automobiles and support housing demand.
He also stressed the importance of opening up the domestic market to foreign investors, noting that the six major provinces – Guangdong, Jiangsu, Zhejiang, Henan, Sichuan and Shandong – account for nearly 60% of China’s total foreign trade and foreign investment. country.
“Opening up is the only way to make full use of both markets and resources and improve international competitiveness,” Li said.
Li’s appearance suggests the heads of state have completed their annual two-week political retreat in the resort town of Beidaihe.