Stronger action may yet be needed to help revive China economy
- Beijing has so far taken a restrained approach with a coronavirus pandemic relief package worth 4 trillion yuan to help businesses cut costs, save jobs and maintain people’s livelihoods
Back then, one recurrent complaint was that the stimulus helped mostly state-run companies and local governments with large infrastructure projects, with little left for the private sector. This time, hopefully, will be different.
The new package announced by Premier Li Keqiang at the recent National People’s Congress aims to help struggling merchants and factories. The package includes tax exemptions, lower bank interest rates, waived contributions to social welfare funds, and reduced charges for utilities such as electricity.
They will be carried out on top of 2 trillion yuan already committed by the central government in fiscal spending and government bond issuances.
While the new spending and tax cuts are in sum total large, they fall short of expectations, reflecting Beijing’s concerns about overspending and worries about debt.