China takes new steps to boost growth
- 12 June 2014
- From the section Business
China has announced new measures aimed at bolstering its economic growth.
These include plans to build railways, roads and airports along the Yangtze River - which connects China's less developed inland provinces to Shanghai.
Meanwhile, China's central bank said it will encourage banks to lend more to exporters to boost shipments.
The moves, the latest in a series of steps taken in recent weeks, come amid concerns over a slowdown in China's economy - the world's second-largest.
China's economy expanded by 7.4% in the January-to-March period, from a year ago, down from 7.7% growth in the final quarter of last year.
After years of robust expansion, China has seen its growth rate slow in recent years, in part due to a slowdown in demand for its exports from key markets.
In an attempt to sustain a high growth rate, and to rebalance its economy, China has been looking to boost domestic consumption.
However, there have been concerns that as China tries to move away from an export-led growth model, growth may slow down further.
Data released earlier this month showed that China's imports declined 1.6% in May, from a year earlier, underlining fears that domestic demand may not be picking up as fast as policymakers had hoped.
At the same time, China's exports have also been under pressure in recent months.
Even though shipments rose 7% in May, they had increased just 0.9% in April and declined sharply in March and February.
On Wednesday, the State Council said that the decision to build a multi-tier transport system along the Yangtze River will help create a new economic belt along the river.
"Better use of the so-called 'golden waterway' can boost economic integration between developed and impoverished regions and inject fresh energy into China's economic growth," the State Cabinet was quoted as saying by the state-owned Xinhua news agency.
According to official data, the 11 provinces and municipalities along the river account for almost 41% of China's overall gross domestic product.
China has also announced various other steps to boost growth in recent weeks.
In April, the government said it will cut taxes on small firms and speed up the construction of railway lines across the country.
It said it will sell 150bn yuan ($24.6bn; £14.5bn) worth of government bonds to finance the increased investment in railways.
Earlier this week, China's central bank said it will cut the reserve requirement ratio (RRR) - the amount of cash banks needs to keep in reserve - for banks engaged in lending to agriculture-related businesses and small companies.
The ratio will be cut by 0.5 percentage points from 16 June.
Banks eligible for the cut include those whose new loans to agriculture-related entities accounted for at least half of their total new lending in the last financial year.
Lenders whose outstanding loans to agriculture-related entities accounted for 30% percent of their total outstanding loans in the last financial year will also be eligible for the cut.
"The targeted RRR cut will cover around two-thirds of city commercial banks," the central bank said.