China, which once boasted a robust defense against the COVID-19 pandemic, is now being hit hard by the return of the virus.
Consumer spending and factory output fell last month, while growth in infrastructure investment that Beijing promoted this year to bolster growth also slowed, according to China’s National Bureau of Statistics.
According to the Policy Research Group (POREG), the overall unemployment rate has risen to a two-year high of 6.1 percent, further evidence of the economic impact of the country’s strictest pandemic protocols.
The think tank pointed out that since the pandemic first exploded a few years ago, China’s stimulus has focused mainly on the supply side.
As China faces the massive economic impact of the virus, Chinese Prime Minister Li Keqiang has called for an accelerated pace and increased efforts in macro policy implementation.
Li, also a member of the Standing Committee of the Political Bureau of the Central Committee of the Communist Party of China, made the remarks last week while chairing a symposium on stabilizing growth held in Yunnan province.
According to Xinhua news agency, he emphasized efforts to stabilize the growth of market entities and support people’s employment and basic maintenance, supported by stable growth.
Noting that the new wave of domestic COVID-19 rebounds and changes in the international situation have put further downward pressure on the economy, Li stressed the importance of confidence, citing China’s more than 150 million market entities, strong resilience and generally stable prices.
“We have always urged to avoid ‘flood-like’ incentives. We have not spent excess paper money even when COVID-19 hit us hardest in 2020,” said Li, adding that there is still room for policy maneuver in the faced with new challenges.
He emphasized the importance of efforts to align the fight against COVID-19 more efficiently with economic and social development, and the importance of increased macro-regulation.
As most of the policies introduced by the Central Economic Work Conference and government work report were implemented in the first half of 2022, Li called on local governments to propose more measures in May to quickly get the economy back on track.
The country must ensure the full implementation of its support measures, including tax cuts and refunds, so that businesses can receive prompt and thorough policy support, Li said.
On stabilizing the economy, the Chinese Prime Minister said the country must ensure adequate grain production and energy supply, maintain price stability and all factors underlying economic development.
Barriers to upstream logistics and downstream connections need to be removed to make industrial and supply chains run more smoothly, Li said.