context: This press conference comes after the State Council's 19 measures to stabilise the economy. Despite this positive spin from economic officials, the economic reality is unlikely to experience a substantial rebound as the root cause is political rather than market-driven factors.
NDRC (National Development and Reform Commission), MoF (Ministry of Finance), PBoC (People's Bank of China) and MofCOM (Ministry of Commerce) held a press conference on economic stabilisation policies. H2 is critical for making up the Q2 losses from pandemic controls, so we must seize the window of opportunity to issue more supportive policies to ensure economic recovery, says Yang Mengkai 杨荫凯 NDRC deputy secretary-general. Current policies are reasonable in scale, insists Yang, because they attend to short-term recovery goals without overspending future resources.
On specific areas for stimulus, Liu Guoqiang 刘国强 PBoC deputy governor said the agency will enhance the stability of aggregate credit growth, lower corporate financing costs, and support weak and pandemic-ridden sectors of the economy. China's monetary policy space is still abundant, and both price-based and quantity-based instruments are available, added Liu.
Ou Wenhan 欧文汉 assistant to the finance minister emphasised mobilising local government special-purpose bonds, delaying administration fee submission, and promoting developmental financing in key infrastructure projects. Special-purpose bonds will prioritise infrastructure in transport, energy, agriculture, water conservation, eco-system and environment protection, social causes, cold chain logistics, national strategic projects, affordable housing, new energy and new infrastructure. MoF will continue to explore the scope for using funds raised through special-purpose bonds as downpayments for critical projects, according to Ou.
Noting the importance of private investments, Yang said that NDRC will improve policy environments to enhance private investments in government projects, incorporating ones that are conducive to socio-economic development, industrial upgrades, and technological advancement in local key project databases. These projects will enjoy preferential treatments in land, sea, energy, water and fund usage, said Yang.