The issuance of 3.45 trillion yuan of special infrastructure bonds will be completed by the end of June.
See Chinese websites prohibit the establishment of mirror websites. Return to the genuine Chinese website.
[See China, June 2, 2022](See a comprehensive report by Chinese reporter Li Zhengxin) Chinese Premier Li Keqiang stated his position to stabilize the economic market and released 33 economic stimulus measures in six areas, but foreign investors have voted with their feet. The 3.45 trillion yuan of special infrastructure bonds issued by China’s Ministry of Finance to local governments will be issued by the end of June, and the central bank will need to inject more cash to this end.
See Chinese websites prohibit the establishment of mirror websites. Return to the genuine Chinese website.
The downward pressure on China’s economy continues to increase, and it is currently at a key node that determines the economic trend of the year. On May 31, the State Council of China issued the “Notice of a Package of Policies and Measures to Stabilize the Economy”, stating that “the complexity, severity, and uncertainty of the economic development environment have increased, and the stabilization of growth, employment, and prices are facing new challenges. .”
It also requires local governments to issue 3.45 trillion yuan (RMB, the same below) of special infrastructure bonds this year by the end of June, and the deadline has been advanced by three months, which means that the urgency of local governments to “wait for rice to cook”.
As of May 27, bond issuance in China’s provinces and cities was 1.85 trillion yuan, accounting for 54 percent of total issuance, according to data from China’s Ministry of Finance. In other words, provinces and cities need to issue nearly 1.5 trillion yuan of bonds in the next few weeks.
Analysts at Guosheng Securities said the move could increase market liquidity pressure and the PBOC would need to inject more cash, possibly through medium-term loan arrangements and RRR cuts.
The urgency of stimulating economic growth has grown due to Beijing’s strict “zero-clearing” epidemic prevention policy. Chinese Premier Li Keqiang last week reiterated the need for policy support and said he would seek positive year-on-year economic growth in the second quarter.
On May 25, the State Council of China held a teleconference on “stabilizing the national economy”. Premier Li Keqiang of the State Council emphasized at the meeting that stable growth should be placed in a more prominent position, efforts should be made to ensure market entities, employment and people’s livelihood, economic resilience, and efforts to ensure In the second quarter, the economy will grow at a reasonable rate and the unemployment rate will drop as soon as possible, keeping the economy operating within a reasonable range.
Li Keqiang said at the meeting that in March, especially since April, some economic indicators have fallen significantly, and the difficulties are greater in some aspects and to a certain extent than when the epidemic was severely hit in 2020.
Analysts believe more stimulus will need to be released in the coming months as some cities ease their lockdowns. If Beijing doesn’t change its “zero” epidemic prevention policy, new outbreaks could trigger further restrictions, at which point economic activity stalls. At the same time, official policy advisers and think tanks have been calling on the central government to issue special bonds. In 2020, 1 trillion yuan of special treasury bonds were issued.
According to Reuters, Jia Kang, dean of Huaxia New Supply Economics Research Institute and former director of the Institute of Fiscal Science of the Ministry of Finance, said, “We should make active preparations for this, and the scale of issuance should be similar to 2020. We are facing A serious challenge, but at least we should strive to achieve it.”
The China Wealth Management 50 Forum, an economic think tank, called for the issuance of about 2 trillion yuan of special government bonds, citing the need to boost economic growth to 6.5 percent in the second half of this year to achieve nearly 5 percent for the whole year. % growth rate.
Beijing has set its GDP (gross domestic product) growth target for this year at around 5.5 percent, but many economists see that goal as increasingly unlikely.
Moreover, the continuous withdrawal of foreign capital from China is also a blow to the Chinese economy. China’s State Council’s economic stimulus measures have been unconvincing for foreign investors as the uncertainty of the lockdown has shaken the confidence of foreign investors.
According to a report by Radio Free Asia on May 31, Cai Mingfang, a professor at the Department of Industrial Economics at Tamkang University in Taiwan, said that the closure of the city has made China’s economic policy full of great uncertainty. Foreign investment in China will definitely not increase, and this confidence problem cannot be replaced. “After they see the situation in Hong Kong, and they see China’s lockdown of Shanghai, they must be less likely to continue investing in a country that is highly artificially controlled.”
Cai Mingfang believes that there will be a large number of college graduates in China in June to the job market. If China’s economy declines and the entire export declines, the job vacancies offered by manufacturers will naturally be greatly reduced. At that time, there will definitely be “more monks and less porridge”, which will make the unemployment situation worse.
Responsible editor: Xin He Source: look at China
Short URL for this article:
All rights reserved, any form of reproduction requires the authorization of China. It is strictly forbidden to create mirror websites.
[Honorary Member Wanted]Streams can merge into the sea, and small kindness can achieve great love. We sincerely solicit 10,000 honorary members from Chinese people all over the world: each honorary member only needs to pay a subscription fee every year to become an honorary member of the “Watch China” website. Provide independent and true key information, warn them in times of crisis, and save them from the great plague and other social crises.
