China unveils stimulus package to kickstart economy after Covid downturn

The Chinese government has unveiled a large fiscal, financial and investment plan to kick-start the economy after the pandemic ravaged key sectors in the last two years.

The plan involves a stimulus package as the Communist Party eyes growth this year with curbs on auto purchases to be lifted and cutting down on tax for small-engined cars.

China's manufacturing sector showed signs of life in May as factories resumed work after Shanghai was locked down due to the virus. The country's manufacturing activity gauged in terms of Purchasing Managers' Index (PMI) rose to 49.6 from 47.4 in April but remained stuck below the 50-point mark.

China has stuck to its "Covid zero" policy as it it has sought to close down cities with only a few virus cases affecting supply chain due to the closure of factories which has severely hit economic activity.

National Bureau of Statistics (NBS) statistician Zhao Qinghe recently said "the recovery momentum still needs to be strengthened" as prices of raw materials remained low.

Watch:China's harsh Covid lockdowns exacerbate population crisis

China has sought to boost cloud computing, blockchain technologies and artificial intelligence ensuring "healthy development of platform companies".

The government wants to expand purchase of cars and home appliances and expand private investment. The government is also seeking domestic firms to list in Hong Kong. Real estate investment trusts (REITs) are being encouraged to raise capital to fund the acquisition of infrastructure projects.

Tax credit rebates will be extended to more sectors with industries hit hard by virus curbs allowed to defer social security payments.

(With inputs from Agencies)

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