“Increasing consumption is key. Targeted measures must be taken to smooth the economic cycle.”
Plenary meetings are held frequently to express central government policy intentions and implement key strategies. Plenary meetings are attended by all Cabinet Ministers, while Executive meetings, which are held more frequently, usually feature senior officials involved in specific topics.
In addition to Premier Li, Vice Premiers Ding Xuexiang, He Lifeng, Zhang Guoqing and Liu Guozhong, all State Councilors, Zheng Shanjie, Chairman of the National Development and Reform Commission and other ministers attended the meeting.
15:12
Chinese consumers are saving money – what does this mean for the rest of the world?
Chinese consumers are saving money – what does this mean for the rest of the world?
Two days earlier, data from the Office for National Statistics showed government incentives to stimulate domestic spending through upgrading of equipment and appliances were not working as expected.
China also continues to be plagued by a range of external challenges, including sluggish real estate prices and trade barriers imposed by the United States and its allies against Chinese companies.
Li said the cabinet needed to adjust policies to “maximize potential consumption” and that China needed to explore new areas to promote foreign trade growth, such as “green trade” and cross-border e-commerce.
To boost private investment, authorities will expand the use of local government special bonds to finance projects, cut red tape that prevents private companies from participating in government-led infrastructure projects, and generally “create a better business environment.”
“We must listen to the pleas of businesses and take action to address their difficulties,” he was quoted as saying.
Beijing also promised to end the overuse of business inspections and fines on companies at the local level, and vowed to promote innovation and development for all market actors.
13:04
What does Chinese consumers’ efforts to save money mean for the world?
What does Chinese consumers’ efforts to save money mean for the world?
Also on Friday, the National Economic and Planning Commission (NDRC) said it would work with three other government agencies to speed up land approval, financing and environmental assessment procedures to help private investors.
Private investment in the first seven months of the year was flat compared with a year earlier, government data showed. In the real estate sector, which is dominated by private companies, investment in the first seven months fell 10.2 percent from a year earlier.
China’s foreign direct investment intake also fell 29.1% in the first half of the year in yuan terms.
“Further measures need to be taken to leverage foreign investment and improve services for them,” the State Council said.
02:49
Chinese shoppers snap up second-hand luxury goods amid economic slowdown
Chinese shoppers snap up second-hand luxury goods amid economic slowdown
Weak macroeconomic data in July and subsequent downside risks have analysts expecting further monetary easing and fiscal support.
“Policymakers are likely to rush to implement further stimulus measures, such as by issuing special bonds and accelerating purchases of housing inventory from property developers,” Larry Hu, chief China economist at Macquarie Capital, wrote in a note on Saturday.
“Policymakers seem unable to afford to miss their growth targets, but they also seem unwilling to overachieve.”
Despite Beijing’s focus on consumption, Julian Evans-Pritchard, head of China research at Capital Economics, said he remained sceptical about the prospects for consumer support measures for households.
He said if the economy continues on its current trajectory, the private sector will eventually start to reduce borrowing.
He also said the domestic market remained weak despite government relief and demand easing measures.
Gavekal research analysts said the Chinese government may issue more bonds in the coming months to fund infrastructure construction, but there is now a growing risk that sluggish exports could drag down economic growth.
“Policymakers will likely step up stimulus if export risks materialize,” they added.
