China unveils new growth measures as economy dips

Beijing unveiled a slew of fiscal and investment measures yesterday to combat slower economic growth as a new survey of manufacturers revealed an unexpected weakening in the sector.

The flash HSBC/Markit Purchasing Managers' Index released yesterday showed output, employment and new orders all falling at a faster pace in July and the employment sub-index sliding to its weakest since the depths of the global financial crisis in early 2009.

The new measures came on the heels of Premier Li Keqiang's pledge to prevent economic growth and employment from slipping too far. Gross domestic product growth slowed in the second quarter while exports in June fell for the first time this year.

Li held a State Council meeting yesterday to announce the new measures, which included exempting small companies - those with monthly sales of less than 20,000 yuan - from value-added and sales taxes and reducing taxes on exports. Keeping the yuan exchange rate stable was another measure.

The cabinet said it would allow private capital to invest in railway construction and accelerate the building of railways in underdeveloped central and western regions.

"These are fine-tune measures by the government, while maintaining the general policies stable, as worrying exports figures and the difficulties facing small businesses put the economy under pressure," said Li Huiyong, chief economist at Shanghai-based SWS Research.