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China to boost targeted policy support for economy: State media

China to boost targeted policy support for economy: State media

Customers dine at a restaurant in a shopping area in Beijing, China. (File photo: REUTERS/Tingshu Wang)

BEIJING: China will step up fiscal and monetary policy support for the economy in a targeted way, state media quoted the cabinet on Friday (Aug 19) as saying, raising expectations that more modest easing steps could be unveiled.

China's key activity indicators showed the economy unexpectedly slowed in July, raising the heat on policymakers to ramp up measures to cope with headwinds including a resurgence of local COVID-19 cases and a slowing global economy.

China will consolidate its economic recovery and keep economic operations within a reasonable range, state media quoted the cabinet as saying after a regular meeting chaired by Premier Li Keqiang.

"At present, the economy continues to recover its development trend, but there are still small fluctuations," the cabinet was quoted as saying.

"It is necessary to strengthen targeted financial and monetary policies to support the real economy, further consolidate the foundation of economic recovery, maintain the economic operation within a reasonable range," it said.

An official statement released after the meeting noted that a decision was made on measures to lower costs, alongside policy measures to better secure the basic livelihood of people in difficulty and meet their essential needs.

According to the statement, the meeting also decided on measures to support elderly care and childcare industries to help them overcome difficulties and restore growth, and agreed to extend the tax exemption policy for new energy vehicle purchases to spur consumption of big-ticket items. 

The meeting noted that having basic living needs met is a key concern of the people and the due responsibility of the government, read the statement.

"Due to the COVID-19 pandemic and natural disasters, the number of people in difficulty has seen an increase.

"Related government departments across various regions have increased support for securing the basic livelihood of people in hardship."

The statement detailed areas of support to meet people's essential needs:

The first, an expansion of coverage for subsistence allowance, with funds delivered to those in need as quickly as possible, along with the second area of support - greater assistance extended to those in distress.

The third area of support involves a limited-time expansion of policy measures from September this year to March 2023. The expanded policy measures will cover 67 million people in total, including those receiving unemployment subsidy and those nearing the eligibility threshold of subsistence allowance.

The central government will provide funding subsidies for the increased expenditure from the expanded coverage of subsistence allowance and other relief schemes.

Finally, the statement also detailed how local governments have to "earnestly fulfil their due responsibilities and provide more targeted assistance and support in a more timely manner".

"Fraudulent obtainment, misappropriation and embezzlement of the funds will be resolutely dealt with," read the statement.

Policy insiders and analysts told Reuters that China's central bank (PBOC) is set to take more easing steps, though it faces limited room to manoeuvre due to worries over rising inflation and capital flight.

China is widely expected to lower its benchmark lending rates on Monday, a Reuters survey showed.

China will improve its market-based interest rate regime and support a rebound in effective credit demand, the cabinet said, adding that authorities will lower financing costs for enterprises and credit costs for consumers.

It also said China would extend an exemption of purchase taxes on "new energy" vehicles to the end of 2023 as part of the measures to boost domestic consumption.

Source: CNA//Reuters/ic

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