China vowed to strengthen policy support and speed up government spending as the economy’s recovery comes under strain.
Finance Minister Liu Kun and Zheng Shanjie, chairman of the National Development and Reform Commission, made the pledges in reports to the country’s legislature on Monday, according to the official Xinhua News Agency.
The comments were largely a repeat of Beijing’s policy stance, with Zheng reiterating the government would beef up counter-cyclical measures and policy reserves, and strengthen the coordination of various policies in the second half of this year.
Growth momentum is not strong, the foundation for sustainable recovery is not solid, and the environment is “full of uncertainties,” Zheng said in the report, according to Xinhua.
The comments come ahead of an expected monthly meeting of the Communist Party’s Politburo, made up of the ruling party’s 24 most senior officials. The Politburo usually sets the dates for important party conferences at its August meeting, although it can’t be ruled out that officials could also discuss more policy support for the economy given mounting concerns over growth.
The next key meeting will likely be the third plenary of the Communist Party’s Central Committee, which takes place every five years and where major economic reforms for the long term will be charted.
Bond Sales
With the central bank already cutting interest rates twice this year and regulators taking steps to ease property restrictions, focus is shifting to fiscal measures to support the recovery.
Liu said authorities will ensure proactive fiscal policy will be more forceful and effective, and will “reasonably accelerate” fiscal spending. The aim is to ensure local governments use up this year’s quota of new special bonds, which are mainly used to finance infrastructure investment, by the end of September, and that the funds are utilized by the end of October, he said.
Those deadlines for bond sales were previously reported by Bloomberg News.
Liu said the ministry will study the expansion of industries where the special bonds can be invested in, and strengthen the coordination between fiscal and monetary policies.
Economists have been downgrading their growth forecasts for China closer to the government’s target of around 5% for this year following a string of recent reports showing a slump in exports, weak consumer spending, and a worsening property crisis.