Business
Charting Course to Navigate Economic Headwinds
Reform, opening up and consumption will be China's major tools to help keep the economy growing steadily during the second half of the year
  ·  2019-08-12  ·   Source: NO. 33 AUGUST 15, 2019
A taxpayer (right) gets a list of her tax and fee cuts from a clerk in the tax bureau of Huian County, Quanzhou, southeast China's Fujian Province, on May 21 (XINHUA)

Reform, opening up and consumption will be China's major tools to help keep the economy growing steadily during the second half of the year and beyond, with the country's policymakers unveiling a general roadmap to help navigate through economic headwinds.

The Political Bureau of the Communist Party of China Central Committee held a meeting on July 30, reviewing the economic situation and setting the tone for future work.

The meeting came as the world's largest developing economy faces downward pressure. Official data showed on July 31 that the country's manufacturing activities continued to stay in the contraction zone in July.

"As the Chinese economy faces new risks and increasing downward pressure, the country should focus on long-term trends and key issues so as to turn crises into opportunities," a statement released after the meeting said.

According to the meeting, China will continue to implement proactive fiscal policy and prudent monetary policy. It said policies on cutting taxes and fees should be further implemented.

"Reduction in taxes and fees is a key tool of positive financial policy and the key to implementing it is to evaluate the effectiveness of the policies carefully and offer sufficient supportive work," said Yang Zhiyong, a researcher with the Chinese Academy of Social Sciences.

China's central bank has raised its re-lending quota by 50 billion yuan ($7.3 billion) to boost financial support for small and micro firms and private businesses.

The financial research center of Bank of Communications noted that the financing structure is expected to be optimized as the meeting called for the science and technology innovation board to properly implement its registration-based initial public offering system with information disclosure at its core and improve the quality of listed firms.

While the country will take targeted measures to support the development of private enterprises, the meeting also called for accelerating the clearing of "zombie companies."

The statement also noted that China will adhere to the principle of "housing is for living, not for speculation," reflecting the determination to ensure the stable development of the real estate market in the long term.

Wang Tao, an economist from UBS, maintained that the statement and recent tightening are mainly intended to prevent too many resources from going into the property sector rather than to weaken the property market in any significant way.

The statement called for more efforts on deepening the supply-side structural reform and expanding the domestic market.

"Domestic demand will get a boost from policies aimed at increasing the property income of rural residents and improving the quality of medium- and high-end consumer goods," said Li Chengjian, a researcher from the Development Research Center of the State Council.

To further boost cultural consumption and the tourism sector, a State Council executive meeting on July 31 called on local authorities to cut or do away with ticket prices for scenic areas and encouraged nighttime catering, shopping and performances.

Development of the e-commerce sector in rural areas will be further promoted, with a focus on improving cold chain logistics for agricultural produce.

Noting that a series of recent policies are aimed at pushing forward reform and opening up, Tu Xinquan, a professor at the University of International Business and Economics, said he expected the next round of reform to be deeper and the speed of opening up faster.

This is an edited excerpt of an article originally published by Xinhua News Agency

Copyedited by Madhusudan Chaubey

Comments to dengyaqing@bjreview.com

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