China promises companies aid, says growth targets can be met

BEIJING (AP) – Regulators promised tax cuts and other aid yesterday to help companies recover from China’s virus outbreak and expressed confidence the ruling Communist Party’s growth targets can be achieved despite anti-disease controls that shut down much of the economy.

At a news conference, finance and planning officials said they are looking at how to channel aid to businesses after President Xi Jinping publicly promised over the past week to ensure farming and other industries recover quickly.

Manufacturing and other industries are gradually reviving, but forecasters say it is likely to be at least mid-March before automakers and other companies have returned to full production.

The government is looking at “targetted tax reduction,” interest rate cuts and payments to poor and virus-hit areas, said an assistant finance minister, Ou Wenhan.

“We will do a good job of implementing large-scale interest rate reduction and tax deferral and ensure effective implementation as soon as possible,” said Ou.

Business activity plunged after the government extended the Lunar New Year holiday in January to keep factories and offices closed and told the public not to travel. Officials are shifting toward reviving business but also have orders to prevent infection from spreading as millions of people return to work.

Workers take a rest near the closed restaurant and bank in Wuhan in central China’s Hubei province. Warning that China’s virus epidemic is ‘still grim and complex,’ President Xi Jinping called on Sunday for more efforts to stop the outbreak, revive industry and prevent the disease from disrupting spring planting of crops. PHOTO: AP

During a meeting on Sunday, Xi said regions deemed to be at low risk of the disease should ease curbs controls and revive business activity while high-risk regions should focus on control. Xi said officials also should make sure planting of spring crops in China’s vast countryside isn’t disrupted.

Asked whether Beijing planned to reduce its economic growth targets for the year, the general secretary of the Cabinet’s planning agency, the National Development and Reform Commission (NDRC), expressed confidence the virus’ impact would be brief.

The ruling party has yet to announce this year’s economic targets after 2019 growth fell to a multi-decade low of 6.1 per cent. Forecasters expect it to be about six per cent but say if the disease isn’t controlled quickly, growth could decline to as low as five per cent, raising the risk of politically dangerous job losses.

“The epidemic’s impact on the economy and society is short-term and generally controllable and will not change China’s long-term positive economic fundamentals,” said the NDRC official, Cong Liang.

“Economic and social development goals for 2020 can be achieved,” Cong said.

Nearly 1,000 companies have received low-interest loans from a 300 billion yuan (USD43 billion) recovery fund offered by the central bank, according to a People’s Bank of China official, Chen Yulu.

Cong said industrial output is rebounding, though he gave no indication when the government expects it to return to normal.

Production by companies in trade-oriented coastal areas has risen above 70 per cent of normal, according to Cong. He said food processing, coal mining and other industries are back to at least 70 per cent, but he gave no figures for the level of production at their lowest point during the outbreak.