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China"s proactive fiscal policy will be implemented in an accelerated fashion, focusing on stabilizing employment, to inject more "certainties" into the economy, senior officials and experts said.
The Ministry of Finance will set up subsidies to support employment. A special development fund for small and medium-sized enterprises will also be arranged, according to Liu Wei, vice-minister of finance.
The fund will be used to build new innovation centers for startups in some pilot cities. It also will be used to provide guarantees and interest subsidies for small businesses if they borrow from commercial banks. The measures represent implementation of a "more proactive" fiscal policy, Liu said, adding that they will be more targeted than a broad, massive stimulus.
Such a policy will help to erase unpredictable factors and stabilize consumption, employment and societal psychology, said Liu Shangxi, head of the Chinese Academy of Fiscal Sciences.
Chinese small and medium-sized enterprises have contributed nearly 80 percent of jobs in cities and towns, although some debt defaults emerged this year. Banks became more risk averse with the deleveraging process and have restricted lending, under liquidity pressure, to small businesses.
But some recent signals indicate that policy may shift to moderate easing, with the joint efforts of both fiscal and monetary policies to support enterprises" financing, especially through bank lending and bond issuance, experts said.
Unlike traditional expansionary policies, the current fiscal policy will focus on boosting the market"s vitality, an "indirect" way to effectively allocate resources, instead of expanding demand directly through governmental cash injections, according to Liu.
"Proactive fiscal policy will play a role to soothe people"s nerves in the developing economy and in society, as there are contingency plans and bottom lines (in policymakers" minds)," he added.
The quarterly economic meeting of top-level policymakers a week ago highlighted increased external challenges, and policymakers pledged to meet annual economic targets. It emphasized implementation of prudent monetary policy while maintaining proactive fiscal policy to support domestic demand.
Also reiterated were the continuation of financial deleveraging and tightening in the property sector.
"It suggests policymakers are not sacrificing the structural adjustment agenda to stimulate stronger growth, and significant easing as in 2009 and 2015 is less likely," said Robin Xing, a China economist at Morgan Stanley.
"Policymakers may aim to maintain a neutral stance and stabilize broad credit growth at around 11 percent in the second half. If trade tensions escalate, they could adopt more fiscal and monetary easing," he said.bracelets with sayings customizefree diabetes rubber braceletspierce the veil silicone wristbandssilicone wristbands ukrubber wristbands with a message