According to the official Xinhua News Agency of the Communist Party of China, Premier Li Keqiang of the Communist Party of China presided over a regular meeting of the State on June 15. The meeting called for seizing the time window, implementing policies to stabilize the economy, not over-issuing currency, not overdrafting the future, and striving to ensure that market players are protected. Employment stabilized prices and the macroeconomic market.
The meeting mentioned that private investment accounts for more than half of the total social investment, and it is necessary to increase policy support and use market methods and reform measures to stimulate the vitality of private investment.
The meeting emphasized three measures, and mentioned that the underground integrated pipe gallery is a representative project of “multiplying with one stone”, and it is necessary to “scientifically plan”, “improve the fee return mechanism”, and attract social capital to participate. Guide financial institutions to issue long-term loans.
The government can’t spend the money to stabilize the economy measures to fail
Recently, Li Keqiang held consecutive meetings with the theme of “stabilizing the economic market”. After introducing 33 measures to stabilize the economy in 6 areas, on May 25, Li Keqiang held a national teleconference on stabilizing the economy with the participation of 100,000 people.
Subsequently, provinces including Jiangsu, Zhejiang, Henan, Hubei, Hunan, Hainan, Yunnan and other provinces immediately convened an extended meeting, stating that they would focus on projects, expand investment, and expand domestic demand.
On May 26, the State Council of the Communist Party of China conducted special inspections on the implementation and supporting policies of 12 provinces.
Wang Jian, a senior media person, said that the most direct and effective way to stabilize the economy is to take money, and if there is money, investment will come.
According to data released by the Ministry of Finance of the Communist Party of China on Thursday (June 16), from January to May, China‘s general public budget revenue was 8,673.9 billion yuan, a year-on-year decrease of 10.1%, an increase of 5.3 percentage points from January to April.
According to estimates by mainland media Jiemian News based on historical data, China‘s general public budget revenue in May was 1,244.6 billion yuan, down 32.5% year-on-year, and the decline was 8.8 percentage points lower than that in April.
In terms of fiscal expenditure, in May, general public budget expenditure increased by 5.7% year-on-year, and the growth rate changed from decline to increase. In April, it fell by 2% year-on-year.
Wang Jian commented that the impact of China‘s economic downturn on local government finances is very obvious. The maintenance of local finance in the past has benefited from two aspects. First, it can borrow on a large scale. Second, China‘s economy has been growing in the past. As long as the economy grows, fiscal revenue is guaranteed. Now, however, there are problems on both fronts. The local government has borrowed too much and can’t borrow it anymore, which has cut a large chunk of its revenue. In terms of debt, local governments rely on borrowing new ones to repay the old ones. They cannot repay the principal of the debt, but need to repay the interest. Interest on debt repayment accounts for about 30% to 50% of local government revenue, and about one-third of China‘s provinces use half of their fiscal revenue to pay interest. That is to say, the local government used to be able to borrow debts and do various things such as infrastructure investment, but now not only cannot borrow debts, but also has to repay interest, and its finances will be tight. On the one hand, revenue has fallen sharply, and on the other hand, the demand for spending is rising, and local government finances are at risk.
According to the monthly report of the machinery and equipment industry released on June 16, in terms of construction machinery, 20,624 excavators of various types were sold in May, a year-on-year decrease of 24.2%; of which 12,179 were domestic, a year-on-year decrease of 44.8%; and 8,445 were exported, a year-on-year increase of 63.9%. . In May, 11,059 loaders of various types were sold, a year-on-year decrease of 27%. Among them, 7,231 units were sold in the domestic market, down 41.8% year-on-year; 3,828 units were exported, up 40.8% year-on-year. Judging from the start-up hours of excavators, there was no significant improvement in the start-up of projects in China in May. The number of start-up hours in May was 104 hours, a year-on-year decrease of 17.1%.
Construction machinery sales are a barometer of infrastructure construction. In May, China‘s domestic construction machinery sales fell by 44.8% year-on-year, indicating that China‘s infrastructure projects have contracted recently. Li Keqiang’s attempts to rely on local governments to stabilize the economy and drive investment seem to have little effect.
Li Keqiang said at the June 15 meeting that “private investment accounts for more than half of the total social investment”. This means that the government has no money and has instead focused on private capital, saying it is using “market measures and reform measures to stimulate the vitality of private investment.”
One of its projects to attract private capital is the “underground integrated pipe gallery” project.
Wang Jian pointed out that the concept of the integrated pipe gallery is to build a tunnel under the city, and put all the power supply, water supply, heating, gas pipelines, telecommunication optical fibers, etc. into it, set up a special maintenance port, unified planning, unified design, unified Management, which makes the city appear uniform, which has existed in the West for more than 100 years, and the CCP only thinks of doing it now.
Wang Jian pointed out that almost all of the CCP’s investment projects are pitfalls. From mixed-ownership reform to PPP, many private enterprises have been dragged to death by state-owned enterprises and by the government. Now that the economy is dying, they think of private enterprises again.
Wang Jian pointed out that the underground integrated pipe gallery is a typical municipal project. There is no business model here. It is a public welfare project. However, the CCP’s municipal charging in recent years has led to higher and higher urban operating costs. Doing so will eventually kill the economy. .
It has already been mentioned at the regular meeting of the National Assembly that “improving” the “charge return mechanism” of the underground integrated pipe gallery will attract social capital to participate, so that every company that enters the facility will increase the charges, and it is the common people who will ultimately pay the bill.
Party media also thought of private enterprises
China‘s economy is unstoppable, and the top levels of the CCP and local governments are helpless. Li Keqiang thinks of letting private capital “fight the fire”.
The report of the party media “People’s Daily” on June 14 also thought of the benefits of private enterprises.
According to the report, in the past 10 years, the number of private enterprises in China has quadrupled, and the proportion of the total number of enterprises has increased by 12.7%; the operating income threshold of the top 500 private enterprises in China is 23.501 billion yuan, an increase of 3.297 billion yuan over 2020; 98 The total assets of 18 private enterprises exceeded 100 billion yuan, an increase of 18 over 2020.
The People’s Daily mentioned that when Xi Jinping visited Sichuan recently, he went to the private enterprise XGIMI Optoelectronics Co., Ltd. to learn about the company’s employment promotion and local support for the private economy.
The party media also said that the “General Secretary” has always been concerned about the safety of private enterprises and supported the development of private enterprises.
The report quoted Xi Jinping as saying: “China‘s private economy can only grow, not weaken. Not only can it not ‘leave the field’, but it must move to a broader stage.”
Lack of social confidence, China’s economy is still in decline
According to official data released by the National Bureau of Statistics of the Communist Party of China on Thursday (June 16), against the backdrop of an intensifying economic slowdown and a real estate crisis, China‘s new home prices fell for the first time in six years in May, falling 0.1% year-on-year and month-on-month Down 0.17%. This is the first drop since November 2015 for the data, which aggregates the average price of new homes in 70 Chinese cities.
In addition, the price of second-hand housing in 70 cities fell by 0.39% month-on-month, the largest decline since February 2015.
China‘s housing prices fell for the ninth straight month through May, according to Bloomberg, a sign that demand remains weak despite the Chinese government’s increased support for the sluggish property market.
Data released by the National Bureau of Statistics of the Communist Party of China on Wednesday (June 15) showed that the unemployment rate hit two new highs in May, and the surveyed unemployment rate in 31 large cities and towns rose another 0.2 percentage points to 6.9%, the highest since 2018. The unemployment rate among the 16-24-year-olds also rose to a record high of 18.4%.
China‘s total retail sales of consumer goods fell 6.7% year-on-year in May, the third consecutive monthly decline. Investment in real estate development fell 4% year-on-year in May, widening from the 2.7% decline in the first four months and the worst since March 2020.
Free Asia quoted economist Singer as saying that the employment situation is related to the consumption power of the society. Since China‘s consumption data has been falling in recent months, it is estimated that China‘s actual unemployment rate should be much higher than the officially announced 5.9 %.
Current affairs commentator Fang Yuan said the poor performance of unemployment, consumption and real estate data all reflected a lack of confidence in society’s future and prospects.