China Vows to Speed Up Investment to Stabilize Growth
(Bloomberg) -- China has vowed to accelerate investment in more than 100 key national projects and boost domestic consumption to help stabilize growth, as pressure on the economy rises amid worsening domestic Covid outbreaks.
“The economy is at a crucial juncture of overcoming difficulties,” according to a statement on the government’s website released after a Monday cabinet meeting chaired by Premier Li Keqiang. “We must make stabilizing growth a higher priority and firmly implement the strategy of expanding domestic demand.”
Fresh pandemic outbreaks and lockdowns are adding to headwinds for an economy already buffeted by weak private consumption and a housing market crisis. The State Council said it will avoid flooding the economy with liquidity and take targeted measures to boost consumption and effective investment, but a growing number of economists are predicting further monetary stimulus in the first quarter.
The government will ensure finance and land is available for key projects related to areas such as food and energy security, advanced manufacturing and high tech, and affordable housing, according to the statement, while major hydro-power programs which have been under review for years should be launched to generate jobs and income for migrant workers.
The government will make efforts to create new jobs, maintain existing posts, and take care of the employment needs of youth and weaker groups in cities, Vice Premier Hu Chunhua said at a national meeting on employment stability Monday. Stability is even more important than usual as the nation prepares for a twice-in-a-decade party congress later this year.
Money from the 1.2 trillion yuan ($188 billion) in local government bonds sold in the fourth quarter of 2021 should be put to work paying for projects as quickly as possible, and new debt approved for this year should be sold soon, the State Council statement said. These various steps will be key to ensuring the economy remains stable in the first half of 2022, it said.
The arrival of the omicron variant is expected to inflict more economic pain on China, with the country applying its Zero-Covid playbook and locking down a number of cities, likely triggering more frequent disruptions to production and consumer spending.
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With assistance from Bloomberg