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China announces detailed stimulus measures to support virus-hit economy

An employee works on the production line of RiotPWR mobile game controllers for U.S. company T2M, at a factory in Dongguan, Guangdong province, China December 7, 2021. REUTERS/David Kirton

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BEIJING, May 31 (Reuters) – China’s cabinet on Tuesday announced a package of 33 measures covering fiscal, financial, investment and industrial policies to revive its pandemic-ravaged economy, adding that it will inspect how governments provincial authorities implement them.

The stimulus package, which was flagged by China’s State Council at a routine meeting last week, underscores Beijing’s shift to growth after COVID-19 control measures hit the country. economy and threatened Beijing’s 5.5% growth target for the year.

To boost investment and consumption, the government ordered localities not to expand restrictions on auto purchases and said those that already have restrictions in place should gradually increase their car ownership quotas.

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The Ministry of Finance also announced on Tuesday that it would halve the purchase tax for small cars. B9N2X102M

China will promote the healthy development of platform companies, which are expected to play a role in stabilizing jobs, the State Council said.

Platform companies are also encouraged to make breakthroughs in areas including cloud computing, artificial intelligence and blockchain technologies, the State Council said, in the latest sign that China is easing the crackdown on e-commerce platforms and tech giants.

China will also increase private investment, speed up infrastructure construction and boost purchases of cars and household appliances to stabilize investment, according to the measures.

CAPITAL MARKETS

In terms of monetary and financial policies, China will enhance the efficiency of financing through capital markets, helping domestic companies register in Hong Kong and promoting overseas listings by qualified platform companies.

The State Council also pledged to further reduce real borrowing costs and strengthen financial support for infrastructure and major projects.

In apparent response to calls, the Shanghai and Shenzhen stock exchanges on Tuesday issued rules allowing listed real estate investment trusts (REITs) to raise fresh capital to finance the acquisition of infrastructure projects.

Beijing sees REITs as a tool to increase financing for infrastructure investments and rental apartments.

To bolster fiscal support for the economy, China will speed up the issuance of special bonds by local governments and cash support to companies that hire college graduates, according to the State Council’s measures.

Authorities will also provide tax credit refunds to more sectors and allow businesses in sectors hit hard by COVID-19 restrictions to defer social security payments, the State Council said.

Other measures include policies to ensure energy and food security and stabilize supply chains.

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Reporting by Stella Qiu, Samuel Shen and Ryan Woo; edited by Stephen Coates/Jason Neely/Ken Ferris

Our standards: The Thomson Reuters Trust Principles.

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