China’s latest efforts to focus on fine tuning ‘weak economic links’ as downward pressure mounts
- State Council calls for more subsidies for low-income consumers and more special purpose bonds to fund additional spending on infrastructure and other projects
- It also wants a timely cut in market interest rates and the amount of money that banks are required to hold in reserve at the central bank
China is continuing to push ahead with fine tuning policy rather than engaging in a large-scale easing even as analysts begin to revise down their expectations for growth next year amid the escalation of trade tensions with the United States.
The country’s cabinet, the State Council, on Wednesday ordered government agencies to more effectively use the countercyclical adjustment tools at their disposal. Specifically, it called for more subsidies for low-income consumers, more special purpose bond issuance to fund additional spending on infrastructure and other projects and a timely cut in market interest rates and the amount of money that banks are required to hold in reserve at the central bank.
“We need to focus on the weak links [in the economy] and expand effective investment,” said a statement released after the meeting chaired by Premier Li Keqiang.
“Also, we must fine-tune our monetary policies, accelerate the implementation of rate-cut measures, and deploy in a timely manner both a universal and a targeted cut of the required reserve ratio.”
We need to focus on the weak links [in the economy] and expand effective investment
Many private sector analysts are predicting that growth will slow below 6 per cent next year, with the US set to add new 15 per cent tariffs on around US$160 billion of Chinese imports in mid-December, meaning virtually all goods will be subject to levies by the end of the year.
To lift overall investment after growth fell to a historically low level of 5.7 per cent between January to July, the government has brought forward the 2020 quota for local government special bond issuance into this year to ensure the continuation of construction momentum with this year’s quota expected to be exhausted later this month.