Premier Li Keqiang presided over a State Council executive meeting on Wednesday, April 13. The meeting:
- made arrangements for policy measures to drive consumption and assist in the stabilisation of economic fundamentals;
- decided to further increase support for export tax rebates to promote foreign trade; and
- settled on measures to increase financial support for the real economy and reduce financing costs.
The State Council executive meeting emphasised the need to "stabilise current consumption and unlock consumption potential with a comprehensive [policy] approach". This approach has five parts:
- deal with the impact of the COVID epidemic and promote recovery in consumption, including by providing government support to "sectors under special hardship" such as hospitality, retail, tourism, civil aviation and road/water/rail transport;
- facilitate new consumption, such as consumption from integrating online and offline consumption and new "smart" [high-tech] products;
- expand key consumption areas, including medical care and health, aged care, child care services, car and household appliances;
- tap the consumption potential of counties and rural areas, including by guiding the expansion of e-commerce platforms reach into rural areas; and
- strengthen safeguards for development and break down barriers that constrain consumption, eg., by ensuring the healthy development of consumption platforms (like app ecosystems) etc.
The State Council executive meeting decided to provide further support for the export sector by:
- increasing the scope of export tax rebate;
- compressing the time needed to process the rebates from 7 to 6 working days; and
- improving the efficiency of customs clearance for export cargo returns to facilitate cross-border e-commerce.
The State Council executive meeting settled on measures to increase financial support for the real economy and reduce financing costs:
- large banks will be encouraged to reduce their provisioning coverage ratio (the percentage of funds that a bank sets aside for losses due to bad debts);
- monetary policy tools, such as reducing the required reserve ratio, will be used in a timely manner to increase financial liquidity and reduce financing costs, especially for micro, small and medium-sized enterprises.
By Adam Ni