Since the beginning of 2018, China’s central bank has reduced the banks’ reserve requirement ratios (RRR) five times in order to free up more capital for lending and, at the same time, guided interbank interest rates to a lower level to cut financing costs for all types of enterprises, private firms in particular. China’s banks issued a record 5.8 trillion yuan ($867 billion) in the first quarter this year. Additionally, the State Council has worked out a package to cut corporate taxes and fees by up to 2 trillion yuan a year. China has more room to cut RRR and reach into the coffers to ratchet up fiscal spending.
The country could remain persistent in investing in new technology so that it always sits on the tide of future opportunities and grabs the high-paying jobs of the future. Thanks to rising investment, a wide range of new industrial lines are springing up, led by high-speed train systems, advanced-reactor nuclear power stations, a homegrown satellite positioning system, 4G and 5G equipment and device plants, big data and artificial intelligence ventures, robotics, and the domestic semiconductor industry.
Thanks to the government directive to strengthen private internet business, the number of people in China connected to 4G mobile networks is reaching 950 million – three times the US population. The so-called “Internet Plus” market is extraordinarily massive, dynamic and innovative. It supports the world’s largest market for mobile shopping, cashless payment, and internet-based sharing businesses in car-hailing, courier delivery, social media and tourism.
NBS reported that retail sales for March rose 8.6 percent, faster than January and February, while online retail raked in double-digit growth in the first quarter.
China also needs to be firm in implementing the Belt and Road Initiative (BRI). The policy’s benefits are two-pronged, as it will direct capital and Chinese experience and knowledge to help recipient countries develop their economies, while China’s trade with BRI participant economies will grow as these countries become well off. After all, through enhanced imports and exports, both China and BRI countries will continue to prosper. This is another reason the Trump administration has been throwing mud on the BRI.