China will step up fiscal and monetary policy support to the real economy on a selective basis, state media reported on Friday citing the cabinet, raising expectations that more measures of modest scope will be announced.
China’s main activity indicators showed an unexpected slowdown in the economy in July, forcing policymakers to step up measures to deal with headwinds, such as the resurgence of COVID-19 and a slowdown in the economy. world.
Beijing will consolidate its economic recovery and keep economic operations within a reasonable range, the media quoted the cabinet after a regular meeting, chaired by Premier Li Keqiang.
“At present, the economy continues to recover its development trend, but there are still small fluctuations,” the cabinet said.
“Specific financial and monetary policies need to be strengthened to support the real economy, further consolidate the foundation of economic recovery, and keep economic performance within a reasonable range,” it added.
Analysts and monetary policy experts told Reuters that the Central Bank of China (PBOC) is ready to take more stimulus measures, although it faces limited room for maneuver due to concerns about inflation and capital flight.
China is expected to lower its benchmark interest rates on Monday, according to a Reuters poll.
China will improve its market-based rate regime and support a rebound in effective credit demand, the cabinet said, adding that the authorities will lower financing costs for businesses and credit costs for consumers.
China will also extend a tax exemption on the purchase of “new energy” vehicles until the end of 2023 as part of measures to boost domestic consumption.
