China aims to boost consumption and investment through new economic support measures after last year’s weak performance. According to some estimates, the fiscal stimulus manoeuvre would be worth around USD 7 billion in the form of tax credits and direct subsidies, financed by drawing on the central budget, to which around USD 20 billion in soft loans at a rate of less than 2 per cent would be added. These measures should be accompanied by incentives for the scrapping of durable goods and the purchase of new ones, which will presumably include electric cars. China’s goal is to increase investment by 25 per cent by 2027 compared to 2023 when it amounted to RMB 4.8 trillion (EUR 609 billion).
Heavy industry, agriculture, construction, transport, education, culture, tourism and healthcare will particularly benefit from this stimulus policy, with investment in these sectors mainly improving the energy efficiency of domestic production. The industrial sector will also be targeted with specific measures to support research and development, with the aim of increasing technological potential. One of the targets is to increase automation by 10 per cent over the next three years, starting from a level of 58.6 per cent at the end of 2022.
Furthermore, an action plan has recently been issued to further open up the Chinese market to foreign investors. The 24 measures contained in the plan cover five main aspects: expanding market access; making China’s business environment more attractive; ensuring a ‘level playing field’ for foreign investors; innovation, and greater alignment between domestic rules and the best international standards in business and trade. According to the action plan, China is committed to reducing the list of sectors in which foreigners struggle to invest and to relaxing restrictions on foreign capital in scientific and technological innovation. The latter process will also apply to the telecommunication and healthcare sectors, especially encouraging investment in new energy-efficient technologies.
The announcement of expanded access to the banking and insurance sectors for foreign financial institutions was also noteworthy. Foreign companies and entities will also have easier access to the domestic bond market thanks to instruments such as the Panda bonds. Finally, the action plan puts in black and white the will to support the flow of data between foreign companies in China and their parent companies abroad, as well as facilitate international exchanges of staff, and improve conditions for foreigners in terms of residence permits.
