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.”
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
