The highest decision-making body promises a package of measures to help industries and small businesses affected by the pandemic.
China will step up support for the economy as COVID-19 outbreaks and the Ukraine war threaten growth, the ruling Communist Party’s top decision-making body said on Friday.
China will roll out a package of measures to help industries and small businesses hit by the pandemic, state media said, citing a Politburo meeting chaired by President Xi Jinping, as the country’s strict lockdowns weigh on consumption and disrupt production. production.
“The COVID-19 and Ukraine crisis has led to increased risks and challenges. The complexity, severity and uncertainty of China’s economic development environment have increased,” the Politburo said.
“The stabilization of growth, employment and prices faces new challenges. It is very important to do a good job in economic work and effectively protect and improve people’s livelihoods.”
Carlos Casanova, senior economist for Asia at UBP in Hong Kong, said the Chinese government was beginning to worry about the effect of severe lockdowns on the economy.
“We expect the economy to contract in the months of March through April before stabilizing in June,” Casanova told Al Jazeera.
“Furthermore, it may take time before these measures translate into a real pick-up in activity, as more and more people go into quarantine and infrastructure investments only drive growth with a lag. We cannot exclude the possibility of a moderate reduction in the short term, particularly due to earnings revisions, which do not yet take into account the impact that these lockdowns will have on consumption. However, we may see a more sustainable rally in the second half of the year, provided the authorities follow through on the rhetoric.”
China’s benchmark index jumped more than 2 percent following the Politburo meeting on Friday, and the tech-focused STAR50 index jumped more than 4 percent. Shares of Hong Kong-listed tech companies also rose, with the Hang Seng tech index up more than 7 percent.
market turmoil
Financial markets have taken a hit in recent weeks amid growing fears that China’s strict lockdowns could do serious damage to the economy and derail the global recovery just as the rest of the world is reeling from the pandemic.
Despite the mounting social and economic costs of Beijing’s controversial “zero dynamic COVID” policy, the Politburo said authorities would continue to try to eliminate outbreaks and minimize the economic fallout.
China will strive to keep economic growth within a reasonable range and achieve social and economic goals by 2022, the Politburo said.
“We should speed up policy implementation, implement tax rebates, tax and fee cuts and other policies, and make good use of all kinds of monetary policy tools,” the Politburo said, adding that it will support sustainable market development. real estate and guarantee stable operations of the capital markets.
Beijing has set a growth target of around 5.5 percent for this year, a goal many economic analysts believe is unlikely to be achieved.
Last week, the International Monetary Fund cut its economic growth forecast for China in 2022 to 4.4 percent, down from 4.8 percent in January.
Major financial institutions including UBS, Bank of America, Barclays and Standard Charted have also lowered their outlooks in recent weeks.