China wants to stimulate the economy with billions in spending

China is facing challenges “like never before,” said Prime Minister Li Keqiang at the People’s Congress in Beijing – and explains how the government intends to cope with the economic consequences of the Corona crisis.

Li Keqiang

Mith additional billions in spending and new debt, the Chinese government wants to fight the economic consequences of the coronavirus pandemic. This was announced by Prime Minister Li Keqiang on Friday at the start of the Beijing People’s Congress. It is planned to issue additional government bonds to the value of one trillion yuan (around 128 billion euros), with which the economy should gain new momentum.

To finance new infrastructure, the volume of regional bonds issued is also to be increased from 2.15 to 3.75 trillion yuan compared to the previous year. According to the plan, the government’s budget deficit will rise from 2.8 to 3.6 percent of economic output.

“These are extraordinary measures for unusual times,” said Prime Minister Li Keqiang, justifying the additional expenses. According to the government report, it must also be ensured that small and medium-sized companies have significantly better access to credit and that financing costs are reduced. Further duty and tax cuts in the amount of 500 billion yuan are planned.

Unemployment is likely to rise nonetheless. After a target for the urban unemployment rate of 5.5 percent last year, a target of 6 percent has now been set. Instead of eleven million, only nine million jobs are to be created.

“Currently and in the near future, China will face challenges like never before,” Li Keqiang swore the delegates on Friday. However, China has a “strong economic base”, “enormous market potential and hundreds of millions of intelligent and hardworking people”. Thanks to the strong growth impulses, China will undoubtedly be able to cope with the challenges.