China last week announced a series of measures to boost its economy ahead of a key Politburo meeting later this week to assess the world’s second-largest economy’s first-half performance.

Str | Afp | Getty Images

China is ramping up measures to boost its economy ahead of a key Politburo meeting this week that will assess the country’s economic performance in the first half of the year.

In the past week, the authorities have announced a number of promises aimed at specific sectors or aimed at reassuring private and foreign investors of a more favorable investment environment – but these were mostly broad measures, some lacking specific details.

related investment news

CNBC Pro

Chinese leaders have also indicated in recent weeks that they likely will deliberate and targeted in their political support.

Here are some of the key measures issued by the Chinese government in recent weeks.

Private businesses

On Monday, China’s Economic Planning Agency announced a series of measures to encourage private investment.

Followed by a a rare joint pledge on Wednesday between the Chinese government and the Communist Party, which has promised to treat private companies the same as state-owned enterprises. Beijing has also pledged to ensure fair treatment in areas ranging from intellectual property and land rights to financing and labor supply.

IN 17-point statement on MondayThe National Development and Reform Commission is committed to attracting more private capital to participate in the construction of major national projects and key industrial chain supply chain projects.

After making life difficult for many private firms in recent years, China’s leadership is changing course and has made high-level promises to improve the business environment.

Julian Evans-Pritchard

Capital economy

The NDRC said it will encourage private investment in sectors – such as transport, water conservation, clean energy, new infrastructure, advanced manufacturing and modern agricultural equipment.

The agency also encourages private investment projects to issue real estate investment trusts (REITS) in the infrastructure sector to promote asset diversification and further expand investment and financing channels for private investment.

The People’s Bank of China and the State Administration of Foreign Exchange last Thursday adjusted their broader funding guidelines to allow companies to borrow more from foreign sources.

Business sentiment generally worsened lackluster economic growth after China’s initial recovery stalled following its exit from “zero Covid”.

The last three years have also been difficult interventions against companies on internet platforms including the e-commerce giant Alibaba; education and gaming sectors as well as real estate developers.

'Entire suite' of policies needed to jump-start China's economy, not more rate cuts: CIO

“After making life difficult for many private firms in recent years, China’s leadership is reversing course and has made high-level promises to improve the business environment,” Julian Evans-Pritchard, head of China Economics at Capital Economics, wrote in a note on Friday.

“While parts of the services sector would benefit from a more accommodating official stance, much of the current caution among private firms reflects broader economic headwinds against which regulatory adjustments are of limited use,” he added.

Consumption

Former Morgan Stanley Asia Chairman on China's Deflation Concerns

Last Monday, official data showed China’s second-quarter GDP grew 6.3% from a year earlier, missing market expectations of 7.3%. Compared to the first quarter, it grew by 0.8% and was slower than the quarter-on-quarter pace of 2.2% recorded in the January-March period.

Even off a low base from last year, given Shanghai’s Covid lockdown at the time, retail sales growth slowed sharply to 3.1% in June from a year earlier, compared to 12.7% in May.

Household Goods

Last week, within hours of the NDRC’s announcement, China’s Ministry of Commerce followed up with a joint announcement with a dozen other government ministries announcing 11 point plan increase domestic consumption of consumer goods and services in households.

This included a directive to local governments to intensify the renovation of old houses, a commitment to support the improvement of online commercial platforms and the development of the “15-minute cities” concept.

Cars and electronics

During a special press conference on Friday, the NDRC issued a 10 point plan increase car ownership, especially for “new energy” vehicles.

This will include improving the capacity of rural energy networks, reducing the costs associated with purchasing and charging electric vehicles.

In June in Beijing extended tax credits to buy electric cars.

Read more about China from CNBC Pro

Source Link