Li Keqiang hoses stimulus hopes

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Chinese PM Li Keqiang yesterday:

“At the moment we are responding to the impact of the epidemic. We have issued a lot of temporary emergency measures in a timely manner, but these measures are phased measures.” Premier Li Keqiang said at the executive meeting of the State Council on March 10 , “the next step is to achieve economic recovery and work hard To maintain the economic operation of the whole year in a reasonable range, we must rely on greater market-oriented reforms and greater openness to the outside world. “

On the day of the meeting, the deployment of the capital chain of the industrial chain was further smoothed to promote the resumption of production and collaboration in all aspects; it was required to make better use of the special re-loan and rediscount policy to support epidemic prevention and control, supply and enterprise rescue development.

According to the epidemic situation

Relevant departments report that at present, due to the impact of epidemic prevention and control and insufficient demand, domestic companies generally have resumption of work and have not fully resumed production.

Li Keqiang clearly requested that, while implementing precise prevention and control in different regions and districts, orderly promote the resumption of work and production in the entire industry chain in an orderly manner.

“We have embarked on a path of harmonious development of large and small enterprises. This is how large enterprises drive the development of small, medium and micro enterprises, which in turn support the development of large enterprises.” The Prime Minister said, “At present, the rate of resumption of work for large enterprises is relatively high, and The resumption rate of small, medium and micro enterprises is relatively low, and the two do not match, which leads to the phenomenon that enterprises cannot resume production and reach production. “

Li Keqiang emphasized that the guidelines for prevention and control of resumption and resumption of production should be improved as soon as possible in accordance with the epidemic situation, the role of the State Council’s work mechanism for resumption and resumption of production should be brought into full play, inter-departmental work special classes should be established, coordinated guidance and coordinated services should be strengthened, and industrial chain and supply chain blockages should be opened. Leading enterprises will be used to drive supporting enterprises to enhance the momentum of coordinated resumption of production and production. It is necessary to strengthen international coordination and cooperation, and to maintain the smooth flow of the international supply chain through measures such as increasing international cargo flights.

Support core enterprises to pay cash to upstream and downstream enterprises in the form of prepayment after financing through credit, bonds, etc.

Li Keqiang recently visited the SF North China Aviation Distribution Center to inspect the resumption of production and logistics in the logistics industry. The person in charge of the enterprise told the Prime Minister that it is currently difficult for small and medium-sized enterprises to resume work and resume production. One of the important reasons is the difficulty of financing. This has affected the resumption of production and resumed production of large enterprises. It is hoped that the country will support core companies in the industrial chain to build financing platforms and help Small and medium-sized enterprises solve the problem of difficult and expensive financing. Li Keqiang immediately asked the relevant departments to study it carefully.

“In order to promote the coordinated resumption of work and production in all aspects, in addition to speeding up the blocking of the industrial chain, it is also important to clear the capital chain.” Li Keqiang said at the executive meeting on March 10. It is necessary to accelerate the introduction of measures to reduce the financing costs of small, medium and micro enterprises through the financing of core enterprises in the industrial chain. “

At the meeting that day, it was decided to guide financial institutions to actively connect with core enterprises in the industry chain, increase liquidity loan support, and give reasonable credit lines. Support core enterprises to pay cash to advance and downstream enterprises in the form of prepayments after financing through credit, bonds, etc., and reduce the cash flow pressure and financing costs of upstream, downstream, small, and micro enterprises. Support enterprises in financing with accounts receivable, warehouse receipts, and pledged inventory. Appropriately reduce the proportion of banks’ acceptance bills for good credit enterprises.

In recent times, relevant departments have guided financial institutions to implement 300 billion yuan of special reloans and 500 billion yuan of reloan rediscount policies in accordance with the requirements of the State Council, and strongly supported the outbreak prevention and control materials security supply, agriculture and enterprises, especially small businesses, with preferential interest rate funds. Micro-enterprises resumed production. In this regard, Li Keqiang fully affirmed.

The Prime Minister demanded that policies be put in place further to speed up the advancement of loans, and better safeguard the funding needs of epidemic prevention supplies, spring ploughing, international supply chain product production, labor-intensive industries, and small, medium and micro enterprises. Appropriate decentralization of credit approval authority. Strengthen audit supervision to prevent “ranching and dripping” and improve the effectiveness of supporting the real economy. We will step up the introduction of targeted inflow reduction measures for inclusive finance, and increase the reduction of shareholding banks, promote commercial banks to increase loan support for small and micro enterprises, and individual industrial and commercial households, help resume work and production, and reduce financing costs.

As long as employment is stable this year, it will not be a big deal if the economic growth rate is higher or lower.

“The impact of this epidemic on China’s economy cannot be underestimated. However, we must do our utmost to stabilize employment. It is not enough to rely on one or two departments to stabilize employment. All relevant departments must consider the work of the whole year. Stabilizing employment is a top priority. “The Prime Minister said,” As long as employment is stable this year, it will not be a big deal if the economic growth rate is higher or lower. “

Li Keqiang said that at the beginning of reform and opening up, the employment pressure faced by the entire country at that time was not imaginable today. But then many places opened their mouths and created a lot of flexible employment forms. For example, those selling clothes and electrical appliances in Guangdong and selling large bowls of tea in Beijing are the result of competition from various places to deregulate, remove restraints, and loosen up. At present, if we want to stabilize the overall situation of employment, we must accelerate the reform of “decentralization of services”, “Internet +”, and innovation, and provide convenience within our ability for all types of entrepreneurial employment.

“The next step in every region and department is to work harder to expand reform and opening up, continuously optimize the business environment, and continue to stimulate market vitality.” The Prime Minister said, “The successful experience of more than 40 years of reform and opening up tells us that the more we encounter The harder it is, the more we must expand reform and opening up. “

According to Goldman, Li is hosing down stimulus hopes and:

Chinese investors have fully priced stimulus, which is why Oct rebar is unchanged vs pre-virus levels, despite record inventories.

This is bearish.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.