Beijing dabbles with stimulus as China’s economic downturn simmers
(Originally published Aug. 1 in “What in the World“) As Typhoon Doksuri turned the streets of Beijing into deadly, raging rivers, China reported that manufacturing activity declined in July for a fourth straight month.
The National Bureau of Statistics’ official purchasing managers’ index (PMI) for July registered at 49.3, up slightly from 49 in June. Any value below 50 represents a contraction. The PMI for non-manufacturing activity, or services and construction, came in at 51.5, down from 53.2 in June.
Beijing on Monday unveiled some subsidies designed to stimulate consumer spending without appearing to contribute any actual central government cash to the effort. The State Council said drivers who trade in older cars for new ones should receive subsidies, but seemed to suggest already cash-strapped provincial governments needed to come up with the funds. In a tip to Obama-era stimulus, it also promised subsidies for rural home weatherizing.
Economists derided the new measures as long on promises and short on details. The State Council also rolled out pledges echoing those made last month by the Politburo, pledging to support private investment, emerging technologies, startups, job creation and business confidence. It promised to motivate capital markets, reform and stabilize the property market, and boost China’s influence in global supply chains. It also approved construction of six new nuclear power plants.
Washington’s economic warfare is clearly starting to get to Beijing. After hearing repeated complaints from Washington that Russian forces are using China-made, commercial drones and drone parts in the war in Ukraine, the Commerce Ministry said Monday imposed restrictions on export of drones that can fly beyond the operators’ sight, fly for more than 30 minutes, weigh more than 7kg or have attachments enabling them to carry and release objects.
Beijing and China’s leading maker of commercial drones, DJI, have said they aren’t exporting drones or parts to Russia or other militaries. The same drones are also popular among Ukrainian forces, who use them to scope out Russian positions and have even modified them to drop explosives.