October 1, 2022

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Premier Li called on six provinces to take the lead in driving growth

Premier Li called on six provinces to take the lead in driving growth

Chinese Premier Li Keqiang presided over an economic meeting Tuesday, during which six leaders from “economically powerful provinces” spoke via video link. Pictured here is me at a virtual event for the World Economic Forum in July 2022.

Xinhua News Agency | Xinhua News Agency | Getty Images

BEIJING – Chinese Premier Li Keqiang called on six provinces to take the lead in supporting the country’s growth after July data showed a slowdown across the board.

Data on retail sales, industrial production and fixed asset investment were released on Monday It missed analysts’ forecasts and posted a slowdown from June. It comes as the Chinese economy registered a growth of just 2.5% in the first half of the year.

“Now is the most important juncture for the economic recovery,” Li told Tuesday’s meeting. He called for “resolute and swift efforts” to strengthen the foundations for recovery.

Much of this responsibility rests with six “economically strong regions” that account for 45% of national GDP, the statement said. She said the six provinces also account for nearly 60% of the national total of trade and foreign investment.

Leaders of coastal provinces with heavy exports in Guangdong, Jiangsu, Zhejiang and Shandong spoke via video link in an economic meeting with Li on Tuesday, the statement said. The leaders of the landlocked provinces of Henan and Sichuan also spoke.

The municipalities of Shanghai and Beijing are not mentioned at the district level.

He added, “Investment will accelerate in the six governorates [the] The central government will [a] “Green light for major investment projects,” said Yu Soo, chief economist at The Economist Intelligence Unit, and said counties may have their own targets allocated to measures such as hiring.

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“Although there is no focus on [national] Target GDP, the premier still attaches great importance to the growth rate by mentioning development [as] It is the key to solving all problems.”

At a high-level Politburo meeting in late July, China’s leaders indicated that the country could miss its GDP target of around 5.5% for this year.

They also said afterwards that “countries that have conditions to achieve economic goals should strive,” according to CNBC’s Chinese translation.

Average growth above average

The six counties highlighted at Tuesday’s meeting set GDP targets ranging from 5.5% to 6.5%, for an average target of 5.75%. That’s according to CNBC’s calculations of numbers released by state media.

In terms of actual growth in the first half of the year, that median was 2.65%, according to CNBC calculations of official data for the six counties accessed through wind information. The county’s GDP growth rates ranged from 1.6% to 3.6% during that period.

I think the meeting reflects the fact that policy makers are disappointed with the July economic data.

Larry is

Chief Chinese Economist, Macquarie

Tuesday’s meeting highlighted the importance of the six provinces to fiscal revenue.

The statement said the four coastal provinces account for more than 60% of all provinces’ net contribution to the central budget. “They must complete their tasks in this regard,” the statement said.

“I think the meeting reflects the fact that policy makers are disappointed with the July economic data,” Larry Hu, Macquarie’s chief China economist, said in an email to CNBC. Meanwhile, they are increasingly concerned about the real estate sector.

“As a result, they want to give another boost to the economy. The sudden cut by the People’s Bank of China on Monday is part of the consolidation,” he said.

Read more about China from CNBC Pro

The central bank unexpectedly cut two interest rates on Monday, leading to expectations that the People’s Bank of China will cut its key loan rate within about a week.

China’s economy has slowed this year, The covid outbreak and the ensuing trade restrictions. exacerbate Recession in the huge real estate sector It also affected the economy.

Regarding real estate, Lee only said that “economically strong counties” should support needs for basic or improved housing conditions, according to the reading.

Instead, Li stressed that provinces need to increase consumption, especially of expensive goods such as cars, the statement said.

Cars contribute the most to growth

The Chinese premier called for more measures to be taken Auto Sales Support in June. Since then, related economic indicators have seen some of the fastest growth rates.

Official data showed that auto production rose 31.5% year-on-year in July. Customs data showed auto exports increased 64% in July from a year ago, and helped boost China’s export growth last month that came in better than expected.

The official retail sales report for July said auto sales growth slowed to 9.7% year over year, down from 13.9% in June. Auto sales accounted for 10% of China’s retail sales in July, which grew by a disappointing 2.7% last month last year.

“The combination of lower auto sales growth and higher auto production growth implies a potential inventory build in the auto sector,” Goldman Sachs analysts said in a report Monday.