China has recently unveiled a series of initiatives aimed at bolstering its economy, leading up to a crucial Politburo meeting that will assess the country’s economic performance in the first half of the year.
To address concerns and attract private and foreign investors, Chinese authorities have made several announcements, although some lack specific details. The government has indicated that it will take discerning and targeted approaches in supporting policies.
Here are some of the key measures that the Chinese government has introduced in recent weeks.
Private Businesses: The National Development and Reform Commission (NDRC) announced a range of measures on Monday to promote private investment. This follows a rare joint pledge from the Chinese government and the Communist Party to treat private companies the same as state-owned enterprises. The NDRC has also pledged to attract more private capital for major national projects and key industrial chain supply chain projects.
The NDRC is also encouraging private investment projects in sectors like transportation, water conservancy, clean energy, new infrastructure, advanced manufacturing, and modern agriculture facilities. Additionally, the People’s Bank of China and the State Administration of Foreign Exchange have adjusted their cross-border financing guidelines to allow companies to borrow more from foreign sources.
Despite past challenges faced by private firms, China’s leadership is now committed to improving the business environment and supporting the private sector. However, the caution among private firms also reflects wider economic headwinds.
Consumption: Official data revealed that China’s GDP growth in the second quarter fell short of market expectations. Retail sales growth also saw a significant decline in June compared to the previous month. To address this, the Commerce Ministry and other government departments have announced an 11-point plan to boost domestic consumption of household consumer goods and services. This includes renovating old homes, improving online commercial platforms, and developing “15-minute cities.”
Cars and Electronics: The NDRC recently released a 10-point plan to increase car ownership, with a particular emphasis on “new-energy” (i.e., electric) vehicles. The plan involves enhancing rural power grids, reducing the costs of purchasing and charging electric vehicles, and the extension of tax breaks for electric vehicle purchases.
Overall, these measures indicate China’s commitment to supporting its economy and attracting investment. However, it remains important to address the wider economic challenges that private firms face in order to ensure sustainable growth.
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