China will introduce and further improve policies to keep employment stable and ensure people’s livelihood, the State Council’s executive meeting chaired by Premier Li Keqiang decided on May 6. Those at the meeting heard a progress report on the delivery of policies previously introduced to drive production resumption and business development.
The Chinese government attaches great importance to advancing both COVID-19 containment and socio-economic development. General Secretary Xi Jinping emphasized on multiple occasions that given the unprecedented challenges facing the economy, full-capacity work and production must be pushed forward, supported by ongoing containment measures, to bring life and work back to normal and foster new drivers of growth. Premier Li Keqiang stressed the need to optimize the guidelines for full restoration of work and production alongside containment, to facilitate the flow of people and factors of production across regions, and to promote normalcy in all types of economic activities.
The meeting took stock of the strong and targeted policy measures that government departments across the country have introduced over recent months. These measures, 90 in total covering eight areas, were designed to advance the resumption of work and production and tide companies over difficulties.
These include more VAT relief for micro, small and household businesses, extending the loss carry-forward period from five years to eight years for sectors severely hit by COVID-19, such as transportation, hospitality and tourism; lowering or waiving 600 billion yuan of employers’ contributions to the old-age pension, unemployment and workplace safety insurance schemes in the first half of the year, and adopting the refund of unemployment insurance premiums for keeping payrolls stable, which has benefited over 84 million employees.
They also include waiving over 140 billion yuan in road and expressway tolls, and cutting electricity and gas rates for enterprises by 67 billion yuan in the first half of the year, releasing 1.75 trillion yuan of funds by cutting the required reserve ratio; providing 2.85 trillion yuan of low-cost lending for businesses, especially micro, small, and medium-sized firms and household businesses, through special re-lending and re-discounts, encouraging State-owned large banks to issue inclusive loans to small and micro businesses, and increasing the special credit quota of policy banks; deferring over 1 trillion yuan in principal or interest payments for more than 1.1 million micro, small and medium-sized businesses, and stepping up support for spring farming and the development of animal husbandry.
"The support policies introduced earlier are adequate. In other words, our policy response is appropriate in its intensity and prompt in timing," Premier Li said.
It was agreed at the meeting that these measures are paying off. Production is steadily returning to the usual capacity, the difficulties facing businesses are easing, and life and work are getting back to normal.
"Early on, as work and production was not fully resumed, it may have been difficult for certain policies to be delivered right away," Premier Li said. "It will still take some time for industries and the market to recover, and there is also the factor of the impact from the global economic situation. These should inform our decisions on the next-step policies."
The meeting highlighted the need to effectively take forward the six priorities, namely, employment, people’s livelihood, the development of market entities, food and energy security, stable operation of the industrial and supply chains, and smooth functioning at the community level. These efforts are designed to ensure stability in six key areas, namely, employment, finance, foreign trade, foreign investment, domestic investment, and market expectations, and maintain solid economic fundamentals.
The meeting urged full implementation of all the policies introduced to help companies, especially micro, small and household businesses, overcome difficulties. Real benefits must be delivered to these businesses to stabilize employment, cushion the impact on jobs and income of workers, including migrant workers, and better provide for people’s livelihoods.
"We must effectively take forward the 'six priorities' to ensure stability in the 'six key areas' and maintain solid economic fundamentals," Premier Li said.
The meeting called for boosting domestic demand as a matter of strategy and taking multi-pronged measures to spur consumption.
To reinforce the weak links exposed in the COVID-19 response and vulnerable areas in socio-economic development, the meeting urged accelerating the major construction projects set out in the national plans, and effectively utilizing the investment under the central government budget and the local government special bonds allocated, to generate economic activity as quickly as possible.
"We must make every effort to meet people’s essential needs. Social protection and fiscal policies should work in sync. Our financial measures should target micro and small businesses and help lower their financing costs," Premier Li said. "Administrative fees should also be reduced as part of the endeavor to support market players."
Continued efforts will be made to improve the business environment, including updating the negative list on market access, and removing the access hurdles facing private firms, especially micro, small and medium-sized enterprises, to boost effective investment from the private sector.
Foreign trade policies will be refined. The negative list on foreign investment and the catalog of industries where foreign investment is encouraged will be revised at a faster pace to further relax restrictions on foreign investment.
"In the current stage, running our own affairs well requires breaking new ground, exploring new ways of growth. The government and the market must work in the same direction, with the market playing a decisive role in resources allocation. We must boost consumption and energize the market to revitalize the economy," Premier Li stressed.
