The third quarter of 2022 will be crucial for China’s economy, the country’s cabinet said, emphasising its focus on issuing debt to fund major infrastructure projects.
The government will also prioritise the fight against the coronavirus pandemic and stabilise employment and prices, state media reported.
The world’s second-biggest economy narrowly missed a contraction in the second quarter, growing just 0.4% year-on-year, weighed down by Covid-19 lockdowns, a weak property sector and cautious consumer sentiment.
The government has set a 2022 growth target of around 5.5%, which was left unchanged after the cabinet meeting.
Major hurdles in the second half include China’s persistent zero-Covid policy that entails curbs and restrictions that could again disrupt local businesses, employment and consumption.
“We will make great efforts to consolidate the foundation of economic recovery, strive to stabilise the economy and keep the economic operation within a reasonable range, give priority to ensuring the achievement of the goal of stabilising employment and prices,” state media quoted the cabinet as saying.
The nationwide survey-based jobless rate eased to 5.5% in June from 5.9% in May, but youth unemployment hit a record 19.3%. Blue-collar migrant workers were also forced to leave cities and return home due to job losses.
The consumer price index (CPI) rose 2.5% from a year earlier in June, the highest in 23 months, reflecting imported pressures despite China’s domestic price controls.
To fund infrastructure projects and support growth, authorities have given policy banks 800 billion yuan ($118 billion) in new credit quotas and allowed them to issue 300 billion yuan in bonds.
There is still considerable room for policies, such as financing instruments via policy banks, to play a role in boosting investment, the cabinet was quoted as saying.
- Reuters, with additional editing by George Russell