What’s new: China faces difficulties in some areas that are more serious than those in 2020 when the Covid-19 pandemic emerged, Premier Li Keqiang said Wednesday at a State Council meeting.
Development is the key to solving all current problems, and the government needs to strike a better balance between economic development and pandemic control with growth as the higher priority, Li said.
The premier pledged that the government would work to protect employment and people’s lives, maintain reasonable economic growth and push for a decline in unemployment in the second quarter.
The State Council, the country’s cabinet, has issued a series of policies to offset the impact on the economy of Covid lockdowns, including tax relief for businesses, subsidies for grain farmers and deferred loan repayments for small companies and consumers. The premier ordered that the details of implementation measures be released before the end of May.
Li told local governments to employ all possible methods to help enterprises in difficulties and treat all kinds of market entities equally.
The background: China’s GDP grew 4.8% year-on-year in the first quarter, beating expectations, but several major provincial-level regions suffered slowdowns in economic growth because local governments rolled out stringent measures under the government’s “zero-Covid” strategy. Economists generally project that China will miss its annual GDP growth target of about 5.5%. Goldman Sachs Group Inc. recently cut its 2022 expansion forecast to 4%.
Beijing will offer more than 140 billion yuan ($21.1 billion) of additional tax relief to businesses, increasing the total of tax rebates and tax cuts this year to 2.64 trillion yuan ($394.1 billion), the State Council said Sunday.
An existing delay on companies’ social-insurance contributions will be extended to the end of the year and expanded to cover more sectors in extreme difficulties. The measures are expected to allow companies to defer payment of 320 billion yuan this year. Other steps include cuts of 60 billion yuan on passenger car purchase taxes. Banks are encouraged to allow deferred repayment of loans by small to medium-sized enterprises and sole proprietors, mortgage and consumer loans, and freight truck loans this year.
Contact reporter Denise Jia (huijuanjia@caixin.com) and editor Bob Simison (bob.simison@caixin.com)
Get our weekly free Must-Read newsletter.
