China Launches Six Major Stimulus Policies to Overcome COVID-19 Crisis

[Asia Economy Reporter Hwang Yoon-joo] There is a claim that China's strong domestic demand expansion strategy will act as an opportunity for our companies.

According to the "China's Six Major Policy Directions and Implications for 2020" released on the 22nd by the Korea International Trade Association's International Trade and Commerce Research Institute, China's economic growth rate in the first quarter of this year plummeted by 12.8 percentage points quarter-on-quarter to -6.8%. The International Monetary Fund (IMF) and the Organisation for Economic Co-operation and Development (OECD) also significantly lowered their economic growth forecasts for this year.

Accordingly, the Chinese government set six major policy directions for the second half of the year at the National People's Congress held from May 21 to 28: ▲support for small and medium-sized enterprises ▲market and government innovation ▲domestic demand expansion ▲opening up and cooperation ▲employment and livelihood stability ▲environment and energy management. They introduced a large-scale economic stimulus package worth 6.35 trillion yuan, including expanding the fiscal deficit and issuing special national bonds and local government bonds.

The report stated, "The Chinese economy has transformed from high-speed growth to high-quality growth," and added, "Going forward, the government will maintain the 'Onzhongqujin (穩中求進)' policy stance, which means stable economic and social development focusing on innovation and efficiency rather than speed, as well as domestic demand and livelihood stability."

The report continued, "Attention should be paid to the domestic demand expansion strategy through stimulating consumption and effective investment among this economic stimulus package," predicting that "demand for replacement of durable goods such as automobiles and home appliances, as well as demand for innovative products and services based on the data economy, will surge, and the domestic economy will gradually recover centered on online channels such as e-commerce and O2O (Online-to-Offline) services."

Park So-young, senior researcher at the Korea International Trade Association, said, "China's strengthening of research and development (R&D) in artificial intelligence (AI) and big data may intensify competition with our companies, but it can also serve as an opportunity to enter new markets through cooperation," and added, "A strategic approach based on understanding the six major policy directions is necessary."

This content was produced with the assistance of AI translation services.