China’s State Council Pledges Faster Growth in Final Quarter

  • Premier Li Keqiang was speaking at meeting earlier in the week
  • Li reiterated previous promises to stabilize economy, demand

Chinese Premier Li Keqiang reiterated pledges to stabilize the economy and stimulate demand in order to lift growth in the final quarter of the year.

It was “no easy feat” to ensure economic growth in the third quarter, Li said at the conclusion of a State Council meeting held on Wednesday, according to an official readout published late Thursday.

Li, who will step down as premier, said it’s crucial to implement measures addressing the lack of effective demand and to boost consumption so that it can be a key driver of growth. Financial and fiscal policies should support the construction of major projects and the renewal of equipment, with Li urging more work to begin in the fourth quarter.

The comments, largely a reiteration of previous pledges, follow data this week showing economic growth accelerated to 3.9% in the third quarter, driven by a pickup in infrastructure investment and stronger industrial output. However retail sales weakened in September amid ongoing Covid restrictions, and unemployment rose. Economists have further downgraded their growth forecasts through 2024.

Li voiced support for infrastructure spending beyond state-led investment, encouraging major projects led by private investors and vowing equal treatment in the procurement of both foreign and home-grown equipment in order to increase demand in manufacturing.

Demand will also be spurred by increasing welfare through employment, with expansion of the “welfare-to-work” initiative to provide jobs, and boost incomes and spending. The scope of the special relending program will also be broadened to provide loans to smaller companies and those upgrading equipment related to consumption. Cities should roll out their own policies to support real demand for first homes and better housing, he said.

The comments echo previous calls from the outgoing premier to stabilize the economy and his earlier pledges to further expand investment in order to create demand and lift confidence. The raft of measures rolled out earlier this year including tax rebates, lower fees, and steps to boost energy supply should continue to be executed, he said.

Source: Bloomberg

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