Beijing plans stimulus for target sectors
Beijing has pledged to support seven new strategic industries, including renewable energy, and kick-start 20 major projects as it moves to counter a sharp slowdown in economic growth.
'It is a strategically significant task to develop strategic emerging industries, particularly when the economy is facing increasing downward pressure,' the government said in a statement after a State Council executive meeting presided over by Premier Wen Jiabao.
Cabinet members discussed and approved a policy document called the 'Development Framework for Strategic Emerging Industries During 12th Five-Year Period', according to the statement yesterday.
Instead of introducing multi-trillion yuan of stimulus plans, the government said targeted industry support would help maintain stable and fast economic development over the long term amid slowdown in the world's second-largest economy.
The statement did not provide specific new policies to boost the industries, which were already identified as key strategic priorities under 12th five-year plan from 2011 to 2015.
But the statement suggests that Beijing is trying to use short-term stimulus efforts to serve its long-term development objectives, including efforts to restructure its economy and its growth model, which are seen as being over-reliant on infrastructure investment and the export of low-end manufacturing products.
Growth of the world's fastest-growing major economy eased to its slowest pace in almost three years in the first quarter, with its gross domestic product expanding only 8.1 per cent during the period.
A string of economic data in April suggested further economic weaknesses amid renewed uncertainty in Europe, prompting calls for the government to adopt swift measures to boost growth.
Economists expect the government to come up some stimulus measures, although they say Beijing is unlikely to duplicate its four trillion yuan (HK$4.54 trillion) package introduced in 2008 to counter the US subprime mortgage crisis.
But officials at the meeting also decided to launch 20 major projects related to the strategic industries. Nuclear, wind and solar power will be a focus of the development plan, according to the State Council.
Manufacturers of new-energy vehicles are among those to benefit from the move, such as Hong Kong-listed BYD and leading carmaker SAIC Motor in Shanghai.
The seven key industries also include energy efficiency and environmental protection, next-generation information technology, biotechnology, high-end manufacturing and new materials.
The authorities will support the development of these industries through preferential policies.
Beijing has recently revealed a series of measures to boost growth, including significantly quicker approvals by the country's top economic planner of new investment projects, primarily in the clean-energy sector.
The State Council announced on May 16 that 26.5 billion yuan in subsidies would be used to stimulate purchases of energy-saving products - mainly cars and household appliances.
The energy-saving projects will officially begin tomorrow and will be implemented for one year.
The last major stimulus package rolled out by Beijing in 2008, during the US subprime scandal that triggered the financial crisis