New stimulus measures by China to boost economic growth

Beijing Bulletin Friday 13th June, 2014

new stimulus measures by china to boost economic growth

• These include plans to build railways, roads and airports along the Yangtze River - which connects China's less developed inland provinces to Shanghai.

• China has been taking various steps in the last few weeks to boost economic growth amid fears the country could be heading for a slowdown in the coming months.

• The nation's economy grew by 7.4 per cent in the first quarter of the year, which was down from the figure of 7.7 per cent recorded between January and March 2013.

BEIJING - China, the world's second largest economy, has announced measures designed to boost its economy, including a wide range of ambitious infrastructure projects.

These include plans to build railways, roads and airports along the Yangtze River - which connects China's less developed inland provinces to Shanghai.

China's central bank said it will encourage banks to lend more to exporters to boost shipments.

China has been taking various steps in the last few weeks to boost economic growth amid fears the country could be heading for a slowdown in the coming months.

The nation's economy grew by 7.4 per cent in the first quarter of the year, which was down from the figure of 7.7 per cent recorded between January and March 2013.

In a statement released Wednesday, the State Council said that the decision to build a multi-tier transport system alongside the Yangtze River is set to create a new economic belt along the river.

According to the state-owned Xinhua news agency, the body said: "Better use of the so-called 'golden waterway' can boost economic integration between developed and impoverished regions and inject fresh energy into China's economic growth."

Senior Communist party officials have started to issue public warnings about the potential consequences of the current slowdown.

"Under the macroeconomic situation right now, overcapacity and the rapid build-up of local government debt are the two problems the central authorities are most concerned about," Wang Baoan, vice-minister of finance, said in a speech published by his ministry. "These two issues could lead to a financial crisis."

On Friday, data scheduled for release is expected to show further weakness in industrial production, fixed asset investment, property and retail sales.

The central bank revealed that it is going to encourage banks to lend more money to companies, as this should boost exports and in turn be good news for the country's economy.

The China Banking Regulatory Commission (CBRC) has promised to tighten supervision over the shadow banking sector in the country. It said loans will be increased and borrowing costs are to be capped in a move the organisation says will boost the supply of funds to the real economy.

CBRC's vice-president Wang Zhaoxing told a news conference that it would work towards improving deposit-to-loan ratios.

Other infrastructure projects announced by the Chinese government include improvements to the navigation capacity of the Three Gorges Dam, while standardised ships are going to be adapted for the Yangtze as this will encourage the development of energy-saving vessels.

In an attempt to sustain a high growth rate, and to rebalance its economy, China has been looking to boost domestic consumption.

However, there have been concerns that as China tries to move away from an export-led growth model, growth may slow down further, said BBC.

Data released earlier this month showed that China's imports declined 1.6 percent in May, from a year earlier, underlining fears that domestic demand may not be picking up as fast as policymakers had hoped.

At the same time, China's exports have also been under pressure in recent months.

Share this article:
Back to Beijing Bulletin

Comments

Featured Story

China to Take Custody of Chinese Couple in Philippines Deaths

MANILA - The Philippine government says it is turning two Chinese diplomats over to China after they invoked immunity when local police arrested them in connection with shootings at a central Philippines restaurant Wednesday that left two diplomats dead.
Philippine Foreign Affairs Spokesman Charles Jose says international law and a 2009 consular treaty between China and the Philippines will guide the handling of the incident.
"The shooting was an extreme act of a relative of a staff of the consulate general," he said. "The Chinese Embassy in Manila and the Chinese Consulate General in Cebu have been extending their full cooperation with Philippine authorities regarding the investigation."
Jose says the Vienna Convention on Diplomatic Relations allows for the two suspects to seek immunity. The convention says "a diplomatic agent shall enjoy immunity from criminal jurisdiction of the receiving state." It also says a diplomat is "inviolable" and cannot be detained. But Jose says China requested that the couple remain in Philippine custody until a Chinese security team picks them up.
"The Chinese government would like to take custody of them and they will have to undergo the Chinese legal process," he said.
Philippine police say the couple were attending a birthday party luncheon inside a private room of a popular Cebu City restaurant when wait staff reported hearing raised voices followed by gunshots.
Authorities citing surveillance video and witness accounts say the shots fired by the husband of the consulate employee killed Deputy Consul Sun Shan and financial officer Hui Li, and injured Consul General Song Ronghua, all of the Chinese consulate in Cebu.
Police say the couple did not answer any questions, pleading their right to immunity. Philippine authorities say they do not know what motivated the shootings. Jose says they continue to investigate the incident.
International law professor Bruce Rivera of the Manila-based San Beda College law school says even though the crime took place within Philippine jurisdiction, the Philippines opted to refer the diplomat-on-fellow-diplomat incident back to China.
"Because clearly it is something personal and it is to protect also perhaps secrets that may be forced to be divulged, to be opened in the public in the course of the investigation, so it is allowed under international law," he said.
Calls and texts to the Chinese Embassy in Manila were not answered.