China revs up fiscal policy support to spur economic recovery

BEIJING - China is making efforts to step up its fiscal policy support and ensure the implementation of established policies, aiming to consolidate its economic recovery as rising external headwinds weigh on growth.

The country will strengthen its fiscal policy to ensure the economy sustains its recovery momentum, Lin Zechang, an official of the Ministry of Finance, said Wednesday.

The remarks came in the wake of Chinese policymakers stressing the need for efforts to achieve the country's annual growth target of around 5 percent for this year, while also acknowledging the challenges facing the economy. These challenges include more adverse impacts from changes in the external environment, a lack of domestic demand, risks in major sectors, and difficulties in the transition from old growth drivers to new ones.

"The task of promoting reform, development and stability in the second half of the year is arduous," according to an official statement released Tuesday after a meeting of the Political Bureau of the Communist Party of China Central Committee. It called for efforts to respond proactively to challenges.

The Chinese economy expanded 5 percent year-on-year in the first half of 2024. In the second quarter, its economic growth moderated to 4.7 percent.

"This year, we have appropriately enhanced the intensity of our proactive fiscal policy, and improved its quality and effectiveness," Lin said, noting that this work has provided solid support for the economy.

To add steam to economic recovery on the fiscal front, Lin said the country will leverage the multiplier effect of government spending.

He said the country will issue ultra-long special treasury bonds in a timely manner and make good use of the funds raised from the sales of those bonds. It will also accelerate the issuance of special-purpose local government bonds and expedite the use of funds raised from their sales.

The issuance of local government bonds totaled 1.9 trillion yuan ($266 billion) by July 26. China will expand the range of areas to which the funds can be channeled to include sectors such as new infrastructure types and new industries, Lin said.

The country will also strengthen its efforts to promote equipment upgrades and trade-ins of consumer goods, he added.

China will allocate 300 billion yuan raised from ultra-long special treasury bonds to support equipment renewal and consumer goods trade-in programs.

Lin said that the country will enhance fiscal support for sectors related to the people's well-being, and ensure the implementation of fiscal and tax policies in areas such as employment, education, elderly care and health care.

China has also pledged greater support for the integrated advancement of technological and industrial innovation, breakthroughs in core technologies in key fields, and the development of strategic emerging industries and industries of the future.