Calls for policy support to spur demand

BEIJING: China’s economy is on the road to steady recovery amid pressures from a complicated and grim external environment and insufficient demand, highlighting the need for more policy support to stabilise expectations and spur market confidence, according to analysts.

They said the economy has shown an uneven recovery with the endogenous driving force still weak and demand lacklustre, and the focus should be placed on boosting domestic demand as well as supporting the development of the private sector.

The comments came as China’s major industrial enterprises saw their profits fall at a slower pace in April amid the continued recovery of industrial production and rapid growth in revenues.

Data from the National Bureau of Statistics (NBS) showed last Saturday that industrial enterprises with annual revenue of at least 20 million yuan (US$2.83mil or RM13mil) saw their total profits drop by 18.2% year-on-year (y-o-y) in April after a 19.2% decline in March.

For the January to April period, profits of industrial enterprises fell 20.6% y-o-y, compared with the 21.4% drop recorded in the first quarter, the bureau said.

Sun Xiao, a statistician at the NBS, said that industrial enterprises are facing difficulties amid a grim international environment and more efforts should be made to expand demand, shore up confidence and spur market vitality.

Zhou Maohua, an analyst at China Everbright Bank, said the structure of corporate profitability has improved due to the steady recovery of domestic demand, falling prices of commodities, solid policy support that help reduce production costs and a relatively low comparison base in the previous year.Difficulties and pressures notwithstanding, a steady improvement in industrial profits in the coming months is expected with stronger policy support, Zhou said.

Louise Loo, lead economist at British think tank Oxford Economics, said that fiscal support will be targeted at industries in the form of tax incentives or subsidies, while the monetary policy will be focused on liquidity support instead of interest rate cuts.Wang Jianjun, vice-chairman of the China Securities Regulatory Commission, said the economy has maintained the recovery trend this year with optimised Covid-19 response measures and strong policy support.

China has the most complete industrial system in the world and an ultra-large domestic market, and the basic trend of steady long-term growth for its economy remains unchanged, which will lay the foundation for high-quality development of listed companies, said Wang. — China Daily/ANN

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