China unveils stimulus package to revive economy after Covid downturn

The Chinese government has unveiled a sweeping fiscal, financial and investment plan to revive the economy after the pandemic ravaged key sectors over the past two years.

The plan involves a stimulus package as the Communist Party eyes growth this year with restrictions on auto purchases lifted and taxes on small cars reduced.

China’s manufacturing sector showed signs of life in May as factories returned to work after Shanghai shut down due to the virus. The country’s manufacturing activity measured in terms of the Purchasing Managers’ Index (PMI) rose to 49.6 from 47.4 in April, but remained stuck below 50 points.

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China has stuck to its “zero Covid” policy as it has sought to shut down cities with only a few cases of the virus affecting the supply chain due to factory closures that have severely affected economic activity.

National Bureau of Statistics (NBS) statistician Zhao Qinghe recently said that “the recovery momentum needs to be further strengthened” as commodity prices have remained low.

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China has sought to boost cloud computing, blockchain technologies and artificial intelligence by ensuring “healthy development of platform companies”.

The government wants to develop the purchase of cars and household appliances and develop private investment. The government is also looking to register domestic companies in Hong Kong. Real estate investment trusts (REITs) are encouraged to raise capital to finance the acquisition of infrastructure projects.

Tax credit rebates will be extended to more sectors, with industries hit hard by virus restrictions allowed to defer Social Security payments.

(With agency contributions)


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Post expires at 2:54pm on Friday June 10th, 2022