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China's central government plans widespread inspections to propel economic growth in second half of the year

2022/8/1 9:09:32   source:Global Times

China's State Council will organize the ninth round of nationwide inspections in late August, according to an announcement made after a meeting by top leaders held on Thursday that analyzed the current economic situation and set the tone for economic work in the second half of 2022.

Analysts said that the inspection of local governments will focus on the implementation of the packages of measures and policies outlined by the central government aimed at boosting demand, which is at the heart of China's economic growth in the second half of the year.

The State Council, China's cabinet, published the announcement on Saturday to solicit proposals in five fields for the ninth nationwide inspection of 19 provinces, in a bid to improve the quality and efficiency of supervision and ensure that the inspection can really solve problems.

According to the document, the inspection will focus on the implementation of policies to stabilize growth, market entities, employment and people's livelihood, supply chains, and measures to improve business environment. The inspection aims to speed up implementation of policies set out in the Central Economic Work Conference and the Government Work Report and to keep the economy running at a reasonable pace, read the announcement.

The purpose of the inspection is to enable micro-, small- and medium-sized enterprises (MSMEs) to receive policy support, so as to solve the problem of weak demand, Hu Qimu, chief research fellow at the Sinosteel Economic Research Institute, told the Global Times on Sunday.

"The biggest problem facing the Chinese economy in the second half is weak demand. Demand will eventually feed back into employment and consumption - the factors that will affect the economy. If demand is weak, enterprises will find it hard to make a profit. If they are not profitable, they will not expand production and recruit. Ninety percent of new jobs in China are created by MSMEs," said Hu.

According to the central government, a large number of policies introduced earlier this year should be able to boost demand. However, at present, demand remains insufficient, which can be seen from the latest statistics.

"That is to say, local governments have a wrong understanding when implementing the policy of the central government, including excessive coronavirus prevention and control measures. Therefore, the central government has decided to correct the deviation," Hu said.

The purchasing managers' index (PMI) for China's manufacturing sector came in at 49 in July, which means it fell into contraction territory again after expanding at 50.2 in June, data from the National Bureau of Statistics (NBS) showed on Sunday. Although the non-manufacturing business activity index and the composite PMI output index remained in expansion territory at 53.8 and 52.5 respectively, they all fell on a monthly basis.

An executive meeting of the State Council presided by Premier Li Keqiang on Friday also noted that the central government will deploy further measures to boost demand, promote corporate investment and increase consumption.

A meeting by the CPC Central Committee's Politburo held on Thursday clarified the tone of work for the second half of the year, with boosting demand as the core. The meeting emphasized that China should improve the stability and competitiveness of China's industrial and supply chains, and smoothen transportation and logistics.

The main policies for the rest of the year will aim to find a solution to the corporate liquidity crunch, and to strengthen the resilience and competitiveness of Chinese industry chains, so as to ensure smooth production, which will create more jobs, Wang Dan, chief economist of Hang Seng Bank China, told the Global Times.

She noted that ensuring employment is among the top priorities during the second half of the year.

"Despite the renewed impact of the COVID-19 pandemic in the second quarter, China's export market share remained high, and exports in the automobile, new-energy and other fields grew strongly, becoming an important driving force for economic recovery, which reflects the international competitiveness of China's industrial chain," said Zhong Zhengsheng, chief economist at Ping An Securities.

Zhong noted that China will continue to actively integrate into global markets and should move faster to realize deeper regional integration, for example, through more trade and direct investment with ASEAN countries and RCEP members.

In the first half of this year, the export value of merchants on Alibaba.com to RCEP members increased by 30 percent year-on-year. Out of this, exports to Indonesia increased by 60 percent and that to the Philippines rose by 55 percent on a yearly basis, according to a statement sent from Alibaba.com to the Global Times.

Analysts also said that ensuring housing delivery is a priority during the second half of the year, as the real estate sector will help propel other major industries, including steel, cement, furniture and home appliances.

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