Pulse on China’s economy: China prepares to front-load policies next year, in bid to guarantee economy gets off to good start: NDRC official
Measures to promote private sector will enhance investor confidence: expert
Published: Nov 16, 2023 07:49 PM
A staff of a delivery center check parcels as the Double 11 shopping festival comes. Photo: VCG

A staff of a delivery center check parcels as the Double 11 shopping festival comes. Photo: VCG

National Development and Reform Commission (NDRC), China's top economic planner, vowed on Thursday that the country will continue its efforts to restore consumer confidence and expand consumption, while accelerating the construction of key projects supported by a special 1 trillion yuan treasury bond ($139.3 billion) issuance, as the world's second-largest economy goes all out to stabilize and boost growth.

The country will make full preparations for front-loading policies for next year, stressing macro-policy's synergy and precision to guarantee a good start for the economy in 2024, Li Chao, a spokesperson for NDRC, told a regular media briefing on Thursday.

China will front-load part of its special-purpose local government bond quota for 2024 and enhance fund management and efficiency.

The NDRC official said that relevant authorities will soon organize the construction of projects that could be favored by the treasury bonds, to start physical work as early as possible.

In November, the sixth session of the Standing Committee of the 14th National People's Congress approved the issuance of an additional 1 trillion yuan in special treasury bonds. The proceeds will be used in eight specific areas, including post-disaster reconstruction, key flood prevention projects and high-standard farmland construction. 

In a recent interview with the Xinhua News Agency, China's new Finance Minister Lan Fo'an said the country will accelerate the pace of the issuance and use of the bond proceeds.

Half of the amount raised is planned for use this year and the other half for next year, which means that the effects of pro-growth policies will last at least through the first half of 2024, and the economy's inherent growth impetus will be rejuvenated, Wang Qing, chief macroeconomic analyst at Golden Credit Rating International, told the Global Times.

The market has been paying close attention, as the bond issuance will start in mid-November.

The quota for the bonds will not be divided according to geography but will be based on project quality and maturity, meaning the more eligible projects there are in a location, the greater the support it will receive from the national fund, domestic media outlet 21caijing reported, citing relevant sources.

Li emphasized that efforts to expand domestic demand will be consistent and include detailed implementation of pro-consumption measures announced previously, along with boosting consumption in key areas and cultivating and tapping into new growth points for consumption.

"We'll continue to improve people's consumption capability and expectations, implement detailed employment priority policies, and increase the incomes of urban and rural residents through multiple channels," Li said.

In July, Chinese authorities issued 20 measures to boost domestic consumption, including support for expanding real estate and auto sales, highlighting the country's efforts to ensure a steady economic recovery and meet its annual economic development goals despite external and internal challenges.

"It is unlikely that the central government will roll out large-scale fiscal policies to spur consumption by the end of this year, considering the low comparison base of retail sales in November and December last year," Wang said, adding that in the next phase, local governments might launch their own stimulus measures such as issuing consumption coupons.

Economic data for October released on Wednesday showed that China's overall economy has been recovering steadily, marked by better-than-expected industrial and consumption data, although exports and investment have being dragging down the uptick.

Notably, retail sales of services grew 19 percent in the first 10 months of the year on a yearly basis, accelerating 0.1 percentage point compared with the January-September period, data from the National Bureau of Statistics (NBS) revealed.

Amid numerous favorable measures, the private economy, a crucial driving force for the output of the world's second-largest economy, has seen obvious improvements at the margin in recent months, Li said.

The number of newly registered private enterprises in September increased by 18.1 percent year-on-year, 8.4 percentage points faster than the previous month, official data showed.

"Current policies have significantly enhanced support for the private economy and private investment, mainly focused on supporting technological innovation, the real economy and the development of small and medium-sized enterprises," Wang said.

"Based on experience, these measures will effectively boost investment confidence in the manufacturing sector," he added.

Wu Chaoming, a deputy head of the Chasing Research Institute, predicated that property investment this year will show a similar decline as last year, while infrastructure investment will maintain a high full-year growth rate of about 8 percent.

"The manufacturing sector will inspire robust investment sentiment," Wu told the Global Times on Thursday.

Investment in property development continued to cool in the first 10 months of 2023, falling by 9.3 percent on a yearly basis, according to the NBS.

"It is expected that further policy announcements and the low base effect last year will support a moderate economic recovery in the fourth quarter, but the dampening effect of insufficient domestic demand is still a major factor," Wu said.