China has unveiled new measures to shore up consumer spending and support smaller firms and the services sector as the nation battles to contain its most extensive Covid-19 outbreaks since the onset of the pandemic. The Chinese government pledged to scale up aid measures for businesses hit hard by the pandemic, ensure the stable supply and prices of basic commodities, and encourage innovation in models of consumption. Key measures include encouraging financial institutions to extend support to hard-hit sectors and encourage eligible areas to offer free nucleic acid tests to workers in the retail and catering sectors. China’s retail sales of consumer goods declined 3.5% year-on-year in March. The outbreaks have particularly hit the catering sector, which saw its revenue decline by 16.4% year-on-year in March, according to the National Bureau of Statistics (NBS). Meanwhile, online retail sales of goods increased 8.8% year-on-year in the first quarter of this year, contributing a larger share to retail sales, which increased by 3.3% from the level of 2021.
Construction of major warehousing bases in major cities is planned to ensure that daily necessities can be distributed during emergencies and the supply of goods will not be disrupted. The growth of new models of spending will be promoted, including on the health and care for the elderly, including tourism, health consultation, daily care and management of chronic diseases for the elderly. The government will give priority to the development of green consumption, including taking steps to promote the use of green construction materials, accelerate the renovation of buildings for energy conservation and support the growth of the new energy vehicle sector. The policy document also called for unimpeded logistics, saying that the development of cold-chain logistics will be expedited, the China Daily reports.
Separately, a meeting of the Central Committee for Financial and Economic Affairs presided over by President Xi Jinping, decided to boost construction of infrastructure focused on national security. This includes construction of 5G networks, the industrial internet, intercity transportation and intracity rail systems, data centers, artificial intelligence, ultra-high voltage infrastructure, and new energy vehicle charging stations. While highlighting the need to upgrade the nation’s water transport network, the meeting’s participants called for developing intelligent power grids, speeding up the improvement of oil and gas pipelines, and strengthening facilities that contribute to the upgrading of the information, logistics, and scientific and technological sectors.
Investments contributed 1.1 percentage points to last year’s GDP growth of 8.1%, compared with 1.7 percentage points from net exports and 5.3 percentage points from consumption. Infrastructure spending, which often accounts for one-third of all investment, rose in the first quarter by 10.5%, year-on-year, while property investment remained subdued with a growth rate of 0.7% in the period.
