China will use effective investment rather than flood-like stimulus to boost the economy, state media report
Customers dine at a restaurant in a shopping district in Beijing, China July 25, 2022. REUTERS/Tingshu Wang/File Photo
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BEIJING, July 29 (Reuters) – China will use effective investment to help the economy recover and not resort to flood-like stimulus, state media said on Friday after a cabinet meeting chaired by Premier Li Keqiang.
The world’s second-largest economy narrowly avoided a decline in the second quarter due to widespread pandemic lockdowns. Analysts said Beijing’s full-year growth target of around 5.5% appeared increasingly unachievable under Beijing’s strict zero-COVID policy.
To spur demand, China urged local governments to accelerate the use of special bonds for mature and viable infrastructure, but such bonds should not be used for land reserves or to bridge the gap between local tax revenues and expenditures, state media said.
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To boost consumption, China will extend a purchase tax exemption on “new energy” vehicles after a car purchase tax cut.
China “will continue to make consumption the key economic driver,” state media reported.
As shoppers tighten their belts, policymakers are finding it harder this year to revive retail consumption — a sector that contributes more than half of the economy and is a major source of jobs.
In the first half of this year, retail sales fell 0.7% year-on-year as many consumers were confined at home due to strict antivirus measures.
The economy is in the “critical window” of stabilization and recovery and the third quarter is “vital,” according to a meeting of the country’s top economic planner on Wednesday.
“(We should) take advantage of the peak season window for construction in the third quarter, improve work efficiency” and “contribute as much as possible to creating jobs for the local population nearby,” said a statement from the meeting of the Friday’s National Development and Reform Commission.
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Reporting by Ellen Zhang and Ryan Woo; Edited by Frank Jack Daniel and Nick Macfie
Our standards: The Thomson Reuters Trust Principles.
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