A new wave of the coronavirus epidemic or the war conflict in Ukraine are currently the biggest risks to the Chinese economy. The cabinet is therefore preparing a package of measures to boost the domestic economy, in coordination with the Chinese central bank.
Stabilisation of markets
A crucial task for the government and the central bank is to stabilise market expectations of future developments. Analysts expect the central bank to cut interest rates, making it cheaper to finance investments, both private and government. This should boost economic growth in China, whose economy is expected to expand by “only” five per cent this year.
Investment support
The government’s measures should also support investment activity and household consumption. The Cabinet also envisages the provision of state loans for technological innovation and for the care of the ageing generation. Sectors such as retail, tourism and air transport can also benefit from government support. While specific measures have not yet been specified, the Chinese government is aware that the local economy may soon face major problems.
