China’s series of policies aimed at stabilizing the economy and expanding opening-up have continued to deliver results. The financial market maintains stable operation with breakthroughs in boosting consumption, stabilizing foreign investment and developing offshore finance. Supported by adequate macro liquidity, the national economy sustains a steady and improving recovery momentum. Meanwhile, global monetary policies have entered a readjustment cycle, and the pattern of international mineral supply chains is being reshaped, highlighting increasingly prominent economic linkages between China and the world.
In the financial sector, domestic market interest rates remain stable, further easing the financing environment for the real economy. On June 22nd, the Loan Prime Rate (LPR) released by the National Interbank Funding Center authorized by the People’s Bank of China remained unchanged, with the one-year LPR at 3.0% and the over-five-year LPR at 3.5%. The steady core interest rates continue to provide low-cost financial support for corporate operation, residential housing purchases and industrial investment. According to financial data for May, China’s M2 supply reached 353.67 trillion yuan, a year-on-year increase of 8.6%, while the stock of social financing stood at 458.81 trillion yuan, up 7.7% year on year. Both growth rates exceed the nominal GDP growth rate of the same period, reflecting sufficient market capital supply. The policy effectively eases the capital turnover pressure on micro, small and medium-sized enterprises as well as individual businesses, creating favorable financial conditions for enterprise capacity expansion and equipment renewal.
Policies to boost consumption have been continuously intensified, with hundred-billion-level subsidies unlocking market potential. The National Development and Reform Commission has recently issued the third batch of 62.50 billion yuan in subsidies for consumer goods replacement. Together with previous supporting policies for equipment upgrading, the total annual subsidies for consumption and industrial upgrading have exceeded 200.00 billion yuan, covering new energy vehicles, home appliances, old elevator renovation and other fields related to people’s livelihood and industrial upgrading. In addition, authorities have launched a special campaign to promote new energy vehicles in rural areas, including 155 models in the subsidy list. New entrants such as Xiaomi and Tesla are included for the first time, with a maximum subsidy of 20,000 yuan per vehicle. Furthermore, eight government departments jointly issued the special plan of “AI-powered Consumption”, focusing on smart terminals, smart home appliances and intelligent service industries to foster new consumption scenarios, promote the intelligent and high-quality upgrading of the consumption market, and continuously release domestic demand potential.
Major policies have been introduced to expand opening-up and stabilize foreign investment. The Ministry of Commerce, the National Development and Reform Commission and the Ministry of Finance jointly issued the Action Plan for Stabilizing and Optimizing Foreign Investment, rolling out 15 targeted measures to solve operational difficulties of foreign-invested enterprises in China. The new policies support key foreign-funded enterprises to conduct domestic listing and financing to broaden their funding channels, and further expand opening-up in modern service sectors including education, finance and medical care. These efforts optimize the market-oriented, law-based and international business environment and boost the confidence of foreign investors for long-term investment in China. Data shows that national general public budget revenue increased by 4.0% year on year from January to May, with stable fiscal revenue and expenditure, providing solid financial support for the implementation of policies to stabilize foreign investment, employment and economic growth. Meanwhile, Shanghai has released a special action plan for offshore finance, striving to build an international RMB offshore trading center, advance the internationalization of the RMB, and enhance the global resource allocation capacity of China’s financial market.
Multiple changes have taken place in the international economy and supply chains. The global monetary policy is undergoing adjustment. The Bank of Japan recently raised interest rates by 25 basis points to 1.0%, followed by the Eurozone, the Philippines, Indonesia and other economies to curb rebounding inflation and local currency depreciation. The US Dollar Index has risen periodically, triggering increased volatility in global financial markets. In terms of resource supply chains, Guinea issued a new policy on June 22nd, banning the direct export of raw and crude gold and requiring all gold resources to undergo intensive local processing before export, marking a key step in the independent upgrading of Africa’s resource industry. In recent years, major African resource countries including Zimbabwe and Guinea have successively introduced mineral export control policies to promote local value-added resource processing. The profound restructuring of the global mineral supply chain brings both new opportunities and challenges to the stability of China’s industrial supply chains.
Industry experts pointed out that China’s economic recovery foundation is being steadily consolidated, with coordinated efforts from prudent and flexible monetary policies, targeted fiscal policies, and multi-dimensional policies for consumption expansion and opening-up. In the next stage, the continuous implementation of large-scale consumption subsidies and foreign investment opening-up policies, coupled with ample financial liquidity, will further release domestic demand and strengthen the resilience of foreign trade and foreign investment. Meanwhile, it is essential to guard against external risks arising from global monetary policy fluctuations and international supply chain adjustments, consolidate the foundation of economic recovery, and promote high-quality development of the national economy.