China’s Premier Urges Fiscal, Monetary Policies to Boost Economy
Chinese Premier Li Keqiang urged officials to use fiscal and monetary policies to stabilize employment and the economy as the country reels from Covid outbreaks and rising inflationary pressure.
The world’s second-largest economy came under greater downward pressure in April due to the latest virus outbreak and bigger-than-expected impact from international situations, China’s state broadcaster CCTV reported, citing a State Council meeting headed by Li.
The report did not mention what specific monetary and fiscal policies Beijing will take. Some Chinese analysts, including a former official at the country’s foreign exchange regulator, are predicting China may cut banks’ reserve requirements and interest rates, possibly in the second quarter.
The State Council meeting came just days after Li warned of a “complicated and grave” employment situation as Beijing and Shanghai tightened curbs on residents in a bid to contain Covid-19 outbreaks in the country’s most important cities. Li instructed all government departments and regions to prioritize measures aimed at helping businesses retain jobs and weather the current difficulties.
The cabinet also urged to stabilize consumer prices and ensure grain output and supply, CCTV reported Wednesday.
China’s factory and consumer prices rose faster than expected in April as Covid lockdowns battered supply chains and prompted people to stockpile food.
The producer price index rose 8% from a year earlier compared to 8.3% in March, official data showed Wednesday, above the 7.8% median estimate in a Bloomberg survey of economists. Consumer-price growth accelerated to 2.1% from 1.5% in the previous month, faster than a projected 1.8% gain.
According to the state TV report Wednesday, China will also take the following measures to shore up the economy:
- Ensure smooth logistics, especially in major hubs, with an aim to stabilize supply chain
- China will offer another 50 billion yuan ($7.4 billion) of renewable energy subsidy to major state-owned power producers, and plans capital injection of 10 billion yuan to support coal-powered generators
- Make use of real estate investment trust (REITs) products to help finance infrastructure projects
- Will exempt some interest payment of college graduates’ student loans