China's Li Urges More Pro-Growth Policy as Economy Sputters




  • In Business
  • 2022-08-17 01:04:11Z
  • By Bloomberg
 

(Bloomberg) -- China's Premier Li Keqiang asked local officials from six key provinces that account for about 40% of the country's economy to bolster pro-growth measures after data for July showed consumption and output grew slower than expectations due to Covid lockdowns and the ongoing property slump.

Most Read from Bloomberg

  • Saudi Billionaire Made $500 Million Russia Bet at War Onset

  • 'Next Generation' Moderna Coronavirus Booster Jab Approved for Use in Adults

  • America's $7 Trillion Retirement Crisis Is Only Getting Worse

  • These Six Cities Are Emerging as New Expat Hot Spots

  • Wells Fargo Plans Major Retreat From Mortgage Business It Long Dominated

Li told officials at a meeting to take the lead in helping boost consumption and offer more fiscal support via government bond issuance for investments, state television CCTV reported Tuesday evening. He also vowed to "reasonably" step up policy support to stabilize employment, prices and ensure economic growth.

"Only when the main entities of the market are stable can the economy and employment be stable," Li was cited as saying at the meeting in a front-page report carried in the People's Daily, the flagship newspaper of the Communist Party.

The meeting came after Monday's surprise interest-rate cut did little to allay concern over the property and Covid Zero-led slowdown. Economists have warned of even weaker growth and have called for additional stimulus, such as further cuts in policy rates and bank reserve ratios and more fiscal spending.

Li acknowledged the greater-than-expected downward pressure from Covid lockdowns in the second quarter and asked the local officials to strike a balance between Covid control measures and the need to lift the economy. "Only by development shall we solve all problems," Li said, according to the broadcaster.

Indicating China may resort to more local debt issuance to pump-prime the economy, Li said "the balance of local special bonds has not reached the debt limit" and the country should "activate the debt limit space according to law," according to the People's Daily report.

Read more: China's Politburo Ignites Talk About $220 Billion More in Debt

Based on the government budget, local authorities may be able to issue an estimated 1.5 trillion yuan ($221 billion) of extra debt and bonds this year to support infrastructure spending, after top leaders urged better use of the existing debt ceiling limit in a key July Politburo meeting. The arrangement could be approved in August, according to some analysts.

China's 10-year government yield rose for the first time this week, up one basis point to 2.64% from the lowest in more than two years.

Li urged local governments to accelerate the construction of projects with sound fundamentals in the third quarter to drive investment, the report said, and also asked officials to expand domestic consumption of big-ticket items such as automobiles and support housing demand.

He also stressed the importance of opening up the domestic market to foreign investors, noting that the six major provinces -- Guangdong, Jiangsu, Zhejiang, Henan, Sichuan and Shandong -- account for nearly 60% of the country's total foreign trade and foreign investment.

"Opening up is the only way to make full use of the two markets and resources and improve international competitiveness," Li was cited as saying.

Li's appearance suggests state leaders have completed their annual two-week policy retreat in resort area of Beidaihe.

(Updates with Li's comments on policy stimulus, details.)

Most Read from Bloomberg Businessweek

  • Whole Foods' Battle Against Black Lives Matter Masks Has Much Higher Stakes

  • Andreessen Horowitz Thinks It's Time for Adam Neumann to Build

  • Chinese Shun Debt and Pile Up Savings, Threatening Global Growth Engine

  • Being Thrown Off Social Media Was Supposed to End Alex Jones's Career. It Made Him Even Richer

  • London Lures Top Facebook Executives

©2022 Bloomberg L.P.

COMMENTS

More Related News

Australia Posts Fiscal Boost From Exports; Surplus Still Distant
Australia Posts Fiscal Boost From Exports; Surplus Still Distant

(Bloomberg) -- Australia reported a significantly improved budget outcome for fiscal 2022 even as Treasurer Jim Chalmers dismissed prospects for the books to...

Apple Ditches iPhone Production Increase After Demand Falters
Apple Ditches iPhone Production Increase After Demand Falters

(Bloomberg) -- Apple Inc. is backing off plans to increase production of its new iPhones this year after an anticipated surge in demand failed to materialize...

Treasury 10-Year Yields Rise Above 4% for First Time Since 2010
Treasury 10-Year Yields Rise Above 4% for First Time Since 2010

(Bloomberg) -- Treasury 10-year yields extended their steepest monthly increase in almost 20 years to top 4% as elevated inflation and rapid central bank...

Darkness Descends on Cuba as Hurricane Causes Blackout
Darkness Descends on Cuba as Hurricane Causes Blackout

(Bloomberg) -- Cuba was hit by a nationwide blackout Tuesday after Hurricane Ian knocked out the country's ailing energy grid as it tore across the island en...

Vietnam Evacuates Thousands as it Braces for Noru, Strongest Typhoon in Decades
Vietnam Evacuates Thousands as it Braces for Noru, Strongest Typhoon in Decades

(Bloomberg) -- Typhoon Noru made landfall in Vietnam early Wednesday morning, knocking out power for more than 500,000 households and causing flooding and...

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply

Comments

Top News: Business