Chinese Prime Minister warns of new ‘downward pressure’ | Business and financial news

The term is generally used by Chinese officials to refer to a declining economy.

China’s economy is facing new downward pressure and has to cut taxes to solve the problems faced by small and medium – sized enterprises, according to the country’s Prime Minister Li Keqiang.

Li did not specify the extent of the new “downward pressure” or its cause, but the term is generally used by Chinese officials to refer to a declining economy. He has used the term before, including several times in 2019.

The economy needs “cross-cyclical adjustments” to continue in an appropriate area, Li said during a visit to China’s top market regulator, state broadcaster CCTV reported. This phrase is associated with a more conservative fiscal and monetary approach that focuses more on the long-term outlook rather than immediate economic results.

China’s economy has been declining in recent months due to Beijing’s pressure to slow down growth in the real estate sector. Li’s remarks came after further signs of weakness in October due to power shortages, which weighed on production, and strict coronavirus controls, which put a brake on holiday spending.

“There are no obvious growth drivers now, so the government is looking for one,” said Bruce Pang, head of macro and strategy research at China Renaissance Securities Hong Kong Ltd. “Small business investment can provide a source of healthier, longer-term growth compared to public investment or real estate investment.”

Authorities will encourage banks to lend more to small businesses, further reduce taxes and fees for them and look at simplifying administrative procedures to encourage more entrepreneurs, Pang said.

The official Production Purchasing Managers’ Index fell to 49.2, the National Bureau of Statistics said Sunday, the second month it was below the 50-mark key signaling a decline in production.

Several investment banks have lowered their forecasts for China’s 2021 growth to below 8 percent in recent weeks. Former Chinese central bank adviser Huang Yiping told Bloomberg News on Tuesday that while China’s economy will slow further over the next few months, annual growth of around 8 percent is achievable.

Li called for the creation of a better business environment through equal treatment of all types of companies and better market surveillance, citing efforts to combat monopolies, unfair competition and hoarding.

A statement from the Chinese government urging local authorities to ensure adequate food supplies during the winter and encouraging people to fill up on essential items prompted talks on the Internet on Tuesday, with the Ministry of Commerce later tried to soothe the worries.

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