The public expects fiscal policy to play a crucial role in stabilizing the economy. China’s State Council has rolled out 33 comprehensive measures, which fall under six categories, to stabilize the economy. Of these measures, 24 are fiscal ones. A national video conference on financial support for stabilizing the economic market was held recently. The executive meeting of the State Council chaired by Premier Li Keqiang on June 1 decided to speed up implementation of a comprehensive package of measures for stabilizing the economy. The meeting decided that the newly added 140 billion yuan ($21.0 billion) in value-added tax (VAT) credit refunds should be mostly delivered by July.
China is facing grim economic prospects. Although the Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) rebounded to 48.1 in May, it is still in contractionary territory; employment expectations have continued to fall and businesses are scrambling to survive the rough times. In the midst of the recent slowdown, the public is naturally pinning high hopes on a fiscal push.
