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China’s cabinet said it would step up support for the economy, vowing to use monetary policy tools at an appropriate time and consider other measures to boost consumption.
Authorities will use various monetary policy tools and enhance the implementation of prudent monetary policy to provide stronger support to the economy, according to the readout from a meeting of the State Council chaired by Premier Li Keqiang on Wednesday.
There is even more downward pressure on the economy and there needs to be new measures to boost confidence, according to the statement. While the economy is moving in a reasonable range, domestic and external difficulties are much larger than expected, with more frequent virus outbreaks, a slowing global economic recovery and fluctuating prices of commodities like grains and energy, the report said.
The government’s ambitious growth target of around 5.5% for this year is looking shaky just a month after it was announced, with the war in Europe causing energy prices to spike and Shanghai and other cities in lockdown to contain the biggest Covid outbreak in two years. That’s all on top of a housing market slump and weak consumer spending that’s plagued the economy since last year.
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The PBOC’s easing stance is in stark contrast with other major central banks such as the Federal Reserve, which is expected to continue hiking interest rates this year to curb soaring inflation.
China’s monetary authorities will be flexible in their use of policy tools to provide better support to the real economy, while ensuring liquidity is reasonably ample, the statement said. There will also be an increase in relending programs for rural and small businesses.
The government will study how to boost consumption and investment, and postpone the collection of pension payments for industries such as restaurants, retail, and tourism that are struggling, especially smaller companies. It will also provide payouts for unemployed and migrant workers as well as vocational training to get them back into the workforce.