China state support for economy this year exceeds 2020, premier says

China state support for economy this year exceeds 2020, premier says

Economists have widely predicted that China will fail to meet its 5.5 percent GDP growth target, blaming  record youth unemployment, ballooning developer debt and manufacturing disruptions from frequent Covid lockdowns
Economists have widely predicted that China will fail to meet its 5.5 percent GDP growth target, blaming record youth unemployment, ballooning developer debt and manufacturing disruptions from frequent Covid lockdowns. Photo: Jade GAO / AFP/File
Source: AFP

State support for China's economy this year is now greater than it was in 2020, Beijing's premier has said, surpassing help given at the height of the coronavirus pandemic as the country grapples with the impacts of its zero-Covid policy and a property sector crisis.

Economists have widely predicted that China will fail to meet its 5.5 percent GDP growth target, blaming record youth unemployment, ballooning developer debt and manufacturing disruptions from frequent Covid lockdowns.

"In response to new challenges, (we have) decisively launched a package of policies to stabilise the economy. Their strength surpasses those of 2020," Premier Li Keqiang said during a Monday State Council conference.

China's economy has also been battered by the two-month lockdown of Shanghai, a nationwide mortgage boycott, and a severe drought and heatwave which shut down manufacturing hubs and severely impacted the agricultural sector.

Read also

China imposes Covid-19 lockdowns for millions around Beijing

The grim economic outlook underscores the difficulty of balancing economic growth with the country's strict zero-Covid policy, with targeted lockdowns, travel restrictions and mass testing depleting fiscal revenues and causing disruption to everyday life.

Li hinted at this fact earlier in August, telling officials "the number of people in difficulty has seen an increase" due to the virus and recent natural disasters.

PAY ATTENTION: Join Legit.ng Telegram channel! Never miss important updates!

Real estate sales, a major economic driver, fell 22 percent in August, year on year, while new home prices have fallen for 11 months straight, according to data released earlier this month.

China's economic growth came in at just 0.4 percent on-year in the second quarter -- its slowest rate since the pandemic began in 2020.

Beijing has taken a number of steps to help revive its economy, including a ramping-up of infrastructure investment, tax credits and loan facilities for SMEs.

Read also

Asian markets mixed as traders steel for more rate hikes

China's banks last week lowered their benchmark lending rates, including on mortgage loans, for the second time this year.

Beijing also announced last week that it would allow local governments to issue more bonds.

But Ting Lu, an analyst at Nomura, wrote these measures would likely not be "game changers" due to the continued zero-Covid policy and the persistent distress affecting the property sector.

Source: AFP

Authors:
AFP avatar

AFP AFP text, photo, graphic, audio or video material shall not be published, broadcast, rewritten for broadcast or publication or redistributed directly or indirectly in any medium. AFP news material may not be stored in whole or in part in a computer or otherwise except for personal and non-commercial use. AFP will not be held liable for any delays, inaccuracies, errors or omissions in any AFP news material or in transmission or delivery of all or any part thereof or for any damages whatsoever. As a newswire service, AFP does not obtain releases from subjects, individuals, groups or entities contained in its photographs, videos, graphics or quoted in its texts. Further, no clearance is obtained from the owners of any trademarks or copyrighted materials whose marks and materials are included in AFP material. Therefore you will be solely responsible for obtaining any and all necessary releases from whatever individuals and/or entities necessary for any uses of AFP material.

Online view pixel