China state support for economy this year exceeds 2020, premier says

BEIJING

State support for China’s economy this year is now greater than it was in 2020, Beijing’s premier has said, surpassing help given at the height of the coronavirus pandemic as the country grapples with the impacts of its zero-COVID policy and a property sector crisis.

Economists have widely predicted that China will fail to meet its 5.5 percent GDP growth target, blaming record youth unemployment, ballooning developer debt and manufacturing disruptions from frequent COVID lockdowns.

“In response to new challenges, (we have) decisively launched a package of policies to stabilise the economy. Their strength surpasses those of 2020,” Premier Li Keqiang said during a State Council conference.

China’s economy has also been battered by the two-month lockdown of Shanghai, a nationwide mortgage boycott, and a severe drought and heatwave which shut down manufacturing hubs and severely impacted the agricultural sector.

The grim economic outlook underscores the difficulty of balancing economic growth with the country’s strict zero-COVID policy, with targeted lockdowns, travel restrictions and mass testing depleting fiscal revenues and causing disruption to everyday life.

China’s economic growth came in at just 0.4 percent on-year in the second quarter - its slowest rate since the pandemic began in 2020.

Beijing has taken a number of steps to help revive its economy, including a ramping-up of infrastructure investment, tax credits and loan facilities for SMEs.
China’s banks last week lowered their benchmark lending rates, including on mortgage loans, for the second time this year.