The Chinese government is planning growth-promoting policies in order to maintain the recovery after the Covid-19 outbreak against the signs of slowdown in the economy.
According to the news of Xinhua, the State Council, which functions as a cabinet in China, discussed the economic situation at its meeting.
In the meeting chaired by Prime Minister Li Chiang, it was stated that China’s economic recovery was affected by the increasingly complex external conditions and the slowdown in global trade and investments, and it was noted that more effective measures were needed in the face of the changing picture.
At the meeting, it was emphasized that the need to improve macroeconomic policies, expand demand effectively, strengthen the real economy and prevent risks in key sectors. An action plan for enterprises in the technology sector and a draft regulation on the management and supervision of private investment funds were also discussed at the meeting.
The news did not include details on what concrete measures to implement to encourage economic recovery.
The People’s Bank of China (PBoC), by pulling the 1-year policy rate from 2.75 percent to 2.65%, signaled that it would go for monetary expansion against the slowdown in the economy.
Following the messages at the State Council meeting, concrete measures for growth are expected to be announced in the near term.
Signs of a slowdown in the economy
May data reveal that the Chinese economy is struggling to maintain its growth momentum in the first quarter of this year, after the recession in the last quarter of last year.According to the data released by China’s National Bureau of Statistics (UIB), industrial production increased by 3.5 percent year-on-year in May, below the 5.6 percent increase in April, while retail sales, which is considered the measure of consumption, increased by 12.7 percent, behind the 18.4 percent increase in April. fell.
Despite the low base caused by the closure and quarantine measures implemented in the spring of last year due to the Covid-19 epidemic, it was observed that production and consumption slowed down.
On the other hand, leading economic activity data announced by UİB pointed to a decline in both the manufacturing industry and non-manufacturing sectors in May. Manufacturing industry purchasing managers’ index (PMI) decreased by 0.4 points to 48.8, while non-manufacturing PMI decreased by 1.9 points to 54.5. While exports decreased by 7.5 percent and imports by 4.5 percent in May compared to the same period of the previous year, unemployment among the young population aged 6-24 rose to a record level with 20.8.
The Chinese economy grew by 3 percent in 2022, recording the lowest annual output growth since 1976, after 2.2 percent growth in 2020, when the first effects of the Covid-19 epidemic were felt. In the first quarter of this year, the economy grew by 4.5 percent, exceeding expectations.
The Chinese government announced a growth target of “around 5 percent” for this year at the National People’s Congress held in March.