China has pledged tax cuts and infrastructure spending to support economic growth, as economists poured doubt on a strong rebound for the world’s second-largest economy as long as lockdowns persist.
Beijing will increase annual tax cuts by more than 140 billion yuan ($21bn) to 2.64 trillion yuan, offer tax rebates to more economic sectors, and postpone social security payments worth 320 billion yuan until the end of the year, the state-run Xinhua news agency quoted the State Council, China’s Cabinet, as saying on Monday.
Other measures include 150 billion yuan ($22.5bn) in emergency loans for the struggling aviation sector, the issuance of 300 billion yuan ($45bn) in bonds to fund railway construction, and investment in new projects in energy, transport and water conservation.
“At present, the downward pressure on the economy continues to increase and it’s very difficult for many market entities,” the cabinet said, according to Xinhua.
Carsten Holz, an expert on the Chinese economy at the Hong Kong University of Science and Technology, expressed doubt that the measures would jumpstart the economy as long lockdowns continue.
“Tax cuts, rebates and deferred social security payments will have no effect on the economy unless the additional funds in the hands of the public can be spent – not possible in lockdown – and the public is willing to spend the funds – less likely in times of uncertainty,” Holz told Al Jazeera.
“I am just not optimistic about economic growth in the PRC for this year – and even for the future, due to long-term, systemic features and traditional economic development trajectories,” Holz added, referring to China’s official name, the People’s Republic of China.
Iris Pang, chief economist for Greater China at ING, said the stimulus “isn’t small” but its impact will depend on the severity of restrictions in future.
“It is at least 3.76 percent of gross domestic product in 2022,” Pang told Al Jazeera. “Whether this is enough depends on how flexible coming lockdowns will be.”
China has set an ambitious target of about 5.5 percent growth for 2022 [File: Thomas White/Reuters]
China’s retail sales and industrial production in April slumped to their lowest levels since the early days of the pandemic, as draconian pandemic restrictions brought major cities, including Shanghai and Beijing, to a standstill.
Beijing has set an ambitious target of about 5.5 percent growth in 2022, which many economists believe is unrealistic given the mounting toll of lockdowns and the lack of a timetable for moving past draconian controls for good.
On top of fiscal measures, China has also set out a looser monetary policy, last week cutting the benchmark reference rate for mortgages by a more than expected 0.15 percentage point.
Gary Ng, a senior economist at Natixis in Hong Kong, said China’s fiscal stimulus may be less effective this time around than during the early days of the pandemic.
“In a way, the success story of China back in 2020 depends not only on the supportive fiscal stimulus but also on the looser mobility restriction after the early containment of the virus. However, the world has changed and the virus has evolved into more transmissible variants,” Ng told Al Jazeera.
“So if the zero-COVID strategy is to remain, corporates and households will still find it difficult to invest and consume despite the more substantial help from the Chinese government. The fiscal policies may not be as effective as before if on-and-off lockdowns prevent normal economic activities.”
OTTAWA – Canada’s unemployment rate held steady at 6.5 per cent last month as hiring remained weak across the economy.
Statistics Canada’s labour force survey on Friday said employment rose by a modest 15,000 jobs in October.
Business, building and support services saw the largest gain in employment.
Meanwhile, finance, insurance, real estate, rental and leasing experienced the largest decline.
Many economists see weakness in the job market continuing in the short term, before the Bank of Canada’s interest rate cuts spark a rebound in economic growth next year.
Despite ongoing softness in the labour market, however, strong wage growth has raged on in Canada. Average hourly wages in October grew 4.9 per cent from a year ago, reaching $35.76.
Friday’s report also shed some light on the financial health of households.
According to the agency, 28.8 per cent of Canadians aged 15 or older were living in a household that had difficulty meeting financial needs – like food and housing – in the previous four weeks.
That was down from 33.1 per cent in October 2023 and 35.5 per cent in October 2022, but still above the 20.4 per cent figure recorded in October 2020.
People living in a rented home were more likely to report difficulty meeting financial needs, with nearly four in 10 reporting that was the case.
That compares with just under a quarter of those living in an owned home by a household member.
Immigrants were also more likely to report facing financial strain last month, with about four out of 10 immigrants who landed in the last year doing so.
That compares with about three in 10 more established immigrants and one in four of people born in Canada.
This report by The Canadian Press was first published Nov. 8, 2024.
The Canadian Institute for Health Information says health-care spending in Canada is projected to reach a new high in 2024.
The annual report released Thursday says total health spending is expected to hit $372 billion, or $9,054 per Canadian.
CIHI’s national analysis predicts expenditures will rise by 5.7 per cent in 2024, compared to 4.5 per cent in 2023 and 1.7 per cent in 2022.
This year’s health spending is estimated to represent 12.4 per cent of Canada’s gross domestic product. Excluding two years of the pandemic, it would be the highest ratio in the country’s history.
While it’s not unusual for health expenditures to outpace economic growth, the report says this could be the case for the next several years due to Canada’s growing population and its aging demographic.
Canada’s per capita spending on health care in 2022 was among the highest in the world, but still less than countries such as the United States and Sweden.
The report notes that the Canadian dental and pharmacare plans could push health-care spending even further as more people who previously couldn’t afford these services start using them.
This report by The Canadian Press was first published Nov. 7, 2024.
Canadian Press health coverage receives support through a partnership with the Canadian Medical Association. CP is solely responsible for this content.
As Canadians wake up to news that Donald Trump will return to the White House, the president-elect’s protectionist stance is casting a spotlight on what effect his second term will have on Canada-U.S. economic ties.
Some Canadian business leaders have expressed worry over Trump’s promise to introduce a universal 10 per cent tariff on all American imports.
A Canadian Chamber of Commerce report released last month suggested those tariffs would shrink the Canadian economy, resulting in around $30 billion per year in economic costs.
More than 77 per cent of Canadian exports go to the U.S.
Canada’s manufacturing sector faces the biggest risk should Trump push forward on imposing broad tariffs, said Canadian Manufacturers and Exporters president and CEO Dennis Darby. He said the sector is the “most trade-exposed” within Canada.
“It’s in the U.S.’s best interest, it’s in our best interest, but most importantly for consumers across North America, that we’re able to trade goods, materials, ingredients, as we have under the trade agreements,” Darby said in an interview.
“It’s a more complex or complicated outcome than it would have been with the Democrats, but we’ve had to deal with this before and we’re going to do our best to deal with it again.”
American economists have also warned Trump’s plan could cause inflation and possibly a recession, which could have ripple effects in Canada.
It’s consumers who will ultimately feel the burden of any inflationary effect caused by broad tariffs, said Darby.
“A tariff tends to raise costs, and it ultimately raises prices, so that’s something that we have to be prepared for,” he said.
“It could tilt production mandates. A tariff makes goods more expensive, but on the same token, it also will make inputs for the U.S. more expensive.”
A report last month by TD economist Marc Ercolao said research shows a full-scale implementation of Trump’s tariff plan could lead to a near-five per cent reduction in Canadian export volumes to the U.S. by early-2027, relative to current baseline forecasts.
Retaliation by Canada would also increase costs for domestic producers, and push import volumes lower in the process.
“Slowing import activity mitigates some of the negative net trade impact on total GDP enough to avoid a technical recession, but still produces a period of extended stagnation through 2025 and 2026,” Ercolao said.
Since the Canada-United States-Mexico Agreement came into effect in 2020, trade between Canada and the U.S. has surged by 46 per cent, according to the Toronto Region Board of Trade.
With that deal is up for review in 2026, Canadian Chamber of Commerce president and CEO Candace Laing said the Canadian government “must collaborate effectively with the Trump administration to preserve and strengthen our bilateral economic partnership.”
“With an impressive $3.6 billion in daily trade, Canada and the United States are each other’s closest international partners. The secure and efficient flow of goods and people across our border … remains essential for the economies of both countries,” she said in a statement.
“By resisting tariffs and trade barriers that will only raise prices and hurt consumers in both countries, Canada and the United States can strengthen resilient cross-border supply chains that enhance our shared economic security.”
This report by The Canadian Press was first published Nov. 6, 2024.
