Summary of Measures for Stabilizing the Economy Discussed at the Executive Meeting of the State Council

On May 23, Premier Li Keqiang chaired the Executive Meeting of the State Council to further deploy a package of measures for stabilizing the economy, striving to push the economy back to the normal track and ensure it operates within a reasonable range.

Policies related to the automobile industry included the relaxation of automobile purchase restrictions and the phased reduction of 60 billion yuan in purchase tax for some passenger cars. According to the China Passenger Car Association’s analysis, in the structurally depressed auto market, consumers of traditional fuel-powered cars have been hit the hardest in recent years and are the most in need of support. From January to April 2022, the sales volume of traditional fuel-powered passenger cars totaled 4.92 million units, a cumulative year-on-year growth rate of -18% compared to the same period last year. In April, the sales volume of traditional narrow passenger cars reached 670,000 units, a year-on-year decrease of 55%, a month-on-month decrease of 50%, and a huge drop.

The phased reduction of purchase tax coupled with the preferential sales policies such as subsidies for trading in old cars for new ones, consumption coupons, and relaxed license plate restrictions introduced by local governments nationwide, is of great significance to the recovery of auto consumption.

In addition, state-owned enterprises’ 90 billion yuan truck loans were required to be delayed for half a year. A few days ago, Premier Li visited Yunnan Province and talked with truck drivers about their repayment pressures. The State Council’s executive meeting issued relevant policies this time, and the actions were very efficient.

The following is the original text from Xinhua News Agency:

“At a recent Executive Meeting of the State Council, Premier Li Keqiang chaired a package of measures for stabilizing the economy to promote economic recovery and ensure that the economy operates within a reasonable range. The meeting pointed out that the current downward pressure on the economy is intensifying, and many market entities are facing difficulties. Development is the foundation and key to solving all problems in China. We must implement the deployment of the CPC Central Committee and the State Council, uphold confidence, respond decisively, comprehensively implement the new development concept, efficiently coordinate epidemic prevention and control and economic and social development, accelerate the implementation of policies determined at the Central Economic Work Conference and the Government Work Report, and increase the degree of implementation according to the general idea and policy direction. We should adopt a package of targeted, strong, and effective interval regulation measures, stabilizing the economic fundamentals.

The meeting decided to implement 33 measures in six aspects, mainly including:”- The first is fiscal and related policies. Efforts are made to stabilize market entities and employment. More industries will implement full retention and refund of stock and increment VAT refunds, increasing refunds by more than 140 billion yuan, and the total amount of tax reduction and exemption for the whole year will reach 2.64 trillion yuan. The policy of deferred payment of three social insurance premiums, including pension payments, for small and micro enterprises, individual industrial and commercial households, and five special hardship industries, will be extended to the end of the year and expanded to other special hardship industries. It is expected that 320 billion yuan will be deferred this year. Unemployment insurance will be expanded to include all insured enterprises in difficulties for training subsidies. For small and micro enterprises that employ college graduates, support will be provided such as increased subsidy for expanding their employment. Local governments should provide support for small and micro enterprises, individual industrial and commercial households, such as water, electricity, gas and rent fees. The special bond of this year will be basically put in place before the end of August, and the scope of support will be expanded to new types of infrastructure, etc. The National Financing Guarantee Fund will guarantee new business cooperation with more than 1 trillion yuan.

• The second is financial policy. The support tools and support ratios for inclusive small and micro loans will be doubled this year. For small and micro enterprises and individual industrial and commercial households loans, trucks loans, temporarily distressed personal housing loans and consumption loans, banks will extend the repayment of principal and interest to the end of the year. The 90 billion yuan commercial truck loans for state-owned automotive companies will be linked with banks for a six-month extension of the repayment of principal and interest. The acceptance period of commercial bills will be shortened from one year to six months. Promote platform companies to legally list domestically and globally.
• The third is to stabilize the industrial and supply chains. Optimize policies for resumption and production and improve services for “white-listed” enterprises. Ensure smooth freight transportation, cancel traffic restrictions from low-risk areas, and lift unreasonable height limits and tolls. Drivers of passenger and freight transport are entitled to free nucleic acid testing elsewhere. An additional 150 billion yuan of emergency loans will be provided to civil aviation, supporting the issuance of bonds of 200 billion yuan by the aviation industry. Increase domestic and international passenger flights in an orderly manner and facilitate the movement of foreign personnel.
• The fourth is to promote consumption and effective investment. Relax restrictions on car purchases and temporarily reduce part of the purchase tax on passenger cars by 60 billion yuan. Support rigid and improvement-oriented housing demands according to city policies. Optimize approval procedures and start a number of projects such as large-scale irrigation and water conservancy, transportation, renovation of old communities, and underground comprehensive pipe corridors, guiding banks to provide large-scale long-term loans. Start a new round of rural road construction and transformation. Support the issuance of 300 billion yuan of railway construction bonds. Increase efforts to help employment through production.
• The fifth is to ensure energy security. Implement responsibilities for local coal production, adjust policies for added coal mine production capacity and accelerate procedures for coal mine supply protection. Start construction of energy projects such as hydropower, thermal power, and wind power.
• The sixth is to ensure people’s basic livelihood. Do a good job in unemployment insurance, subsistence allowances, and assistance for people in difficulties. Adjust social assistance and security standards in a timely manner based on the rise in prices.

The meeting emphasized that all localities and departments should enhance their sense of urgency and vigorously implement the measures. Relevant departments should refine each measure as soon as possible and publish their implementation plans. The State Council will supervise the implementation of economic stabilization measures by local governments and local governments should formulate economic stabilization policies that suit their local conditions.?Information source: Xinhua News Agency

This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.