Xi pledges more stimulus to rein in damage

Finance | Agencies and Stella Zhai 13 Feb 2020

President Xi Jinping proposed more fiscal stimulus, including tax cuts and other aid, to industries affected by the virus outbreak in a renewed effort to rein in the rising damage to the economy.

Beijing needs to "maintain stable economic operation and social harmony," the New York Times reported, citing Xi's comments broadcast on state television.

Analysts and bankers have been revisiting their estimates of the virus' economic impact on China, with Invesco lowering its first-quarter GDP estimate from 5.2 percent to 4.5 percent.

Production in construction and manufacturing will be delayed until the second quarter, and a rise in the scope of consumption, construction and manufacture is expected in March and April, Invesco forecasts.

China has room to ramp up stimulus if its economy slows further due to the coronavirus outbreak, but should not lose sight of structural reforms to address rapid credit growth, a senior International Monetary Fund official said.

Changyong Rhee, director of the IMF's Asia and Pacific Department, said China's growth rate has been moderating even before the outbreak of the coronavirus because of "desirable" steps by its government to deleverage its economy.

Beijing will likely rely more on stimulus measures this year to keep its economy afloat, though the direct boost to growth will be smaller than past fiscal measures that focused on big infrastructure spending, he said.

In other news, Foxconn's chairman Liu Young-way hopes to resume half of its production in China by month-end, as the supplier to tech giant Apple and others reopens plants shut over a coronavirus outbreak, Reuters reported citing sources.

The world's largest contract electronics maker also aims to resume 80 percent of production in China in March, added the source, citing internal targets set by Liu.

Foxconn got the green light this week to reopen major plants in China, and its plant in the eastern city of Kunshan was also approved on Tuesday to resume production, Reuters reported.

But just about a tenth of the workforce had returned to two key plants in southern Shenzhen and central Zhengzhou as of Monday, a source said.

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