China’s leaders have pledged to target their efforts on boosting consumption in their bid to turn around the world’s No2 economy.
Beijing says it will focus on lifting demand and shun using a flood of stimulus, state media said on Friday, following a cabinet meeting chaired by Premier Li Keqiang.
China narrowly avoided contraction in the second quarter following months of widespread pandemic lockdowns. Analysts said Beijing’s full-year growth target of around 5.5% had been looking increasingly unattainable under Beijing’s strict zero-Covid policy.
To spur demand, China has urged local governments to speed up the use of special bonds for infrastructure that are mature and profitable, but added the bonds should not be used for land reserves or to make up the gap between local fiscal revenue and expenditure, state media said.
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To spur consumption, China will extend an exemption on the purchase tax on “new energy” vehicles, following a cut to the car purchase tax.
China “will promote consumption to be the major economic driver continuously,” state media reported.
As shoppers tighten their belts, policymakers have found it harder to revive retail consumption this year – a sector that contributes more than half to the economy and a major source of employment.
In the first half of this year, retail sales dropped 0.7% from a year earlier as many consumers were confined at home amid strict anti-virus measures.
The economy is in the “critical window” of stabilisation and recovery, and the third quarter is “vital,” according to a Wednesday meeting of the country’s top economic planner.
“[We should] seize the time window of the peak season for construction in the third quarter, improve work efficiency” and “help create jobs for local people nearby as much as possible,” said a Friday statement of the meeting by the National Development and Reform Commission.
- Reuters with additional editing by Sean O’Meara
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