China presents measures to promote private investment – 07/24/2023 – Market
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China’s state planning body released measures on Monday to promote, encourage and encourage private investment in some infrastructure sectors and said it would strengthen financial support for private projects.
The latest announcement comes after China pledged last week to improve the private sector, releasing Communist Party and cabinet guidelines, as officials vowed to make it “bigger, better and stronger” amid the post-pandemic economic recovery.
The National Development and Reform Commission said in a statement that it seeks to attract more private capital to participate in the construction of large national projects.
The commission said a list of sectors ranging from transport, water, clean energy, new infrastructure to advanced manufacturing and modern agriculture will be available for participation by private investors, according to the statement. More specific details on this will be provided later, he added.
In recent weeks, investors have been betting on more stimulus measures to shore up an economy that has begun to rapidly lose steam after the initial post-Covid jump. However, the piecemeal measures announced by the authorities have disappointed the markets.
The world’s second-largest economy grew at a fragile pace in the second quarter as demand weakened both in China and abroad, increasing pressure on policymakers to introduce more stimulus measures.
In guidelines released last week, China said it would create a system to clarify areas in which private investors can invest.
“The importance of improving private investment should be fully recognised” and the commission will strive to keep the proportion of private investment in fixed assets among all investments at a “reasonable level”, the statement said.
The commission also pledged to strengthen financial support for private investment projects.
Also on Monday, the Politburo, the ruling body of the Chinese Communist Party, said China will step up support for the economy amid a tortuous post-Covid recovery and focus on expanding domestic demand, according to state news agency Xinhua.
“Currently, China’s economy faces new difficulties and challenges, which mainly arise from insufficient domestic demand, difficulties in the operation of some companies, hidden risks and dangers in key areas, as well as a gloomy and complex external environment,” the Politburo was quoted as saying by Xinhua.
The authorities pledged to “intensify macroeconomic policy adjustments, focus on expanding domestic demand, boost confidence and prevent risks, and continuously promote the improvement of economic operations,” Xinhua said.
China will implement its macroeconomic adjustments precisely and forcefully as the government maintains a prudent monetary policy and proactive fiscal policy, the Politburo said.
Separately, President Xi Jinping said, according to Xinhua, that China will seek to achieve its annual development goals.
While the country is on track to meet its 2023 growth target of around 5%, there are risks of missing it for the second straight year, analysts say.
China will actively expand domestic demand, boosting residents’ incomes to spur consumption’s key role in economic growth, while accelerating local special bond issuance to fuel investment, Xinhua said.
The government will further increase consumption of automobiles, electronics and household products, and promote tourism consumption, Xinhua added.
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