BEIJING, July 21 (Reuters) – Chinese authorities on Friday announced measures aimed at boosting sales of cars and electronics to shore up the struggling economy, but investors have called for stronger economic stimulus. It wasn’t enough to impress the house.
A statement on car consumption released by 13 government agencies, including national planners the National Development and Reform Commission, said regions would be encouraged to increase their annual car purchase allowances and efforts to support used car sales would be implemented. It is said that it will be carried out.
As China’s post-pandemic economic recovery slows, policymakers have identified the country’s auto sector as a key lever they hope to use to boost growth. In June, the government unexpectedly extended purchase tax incentives for new energy vehicles (NEVs) until 2027.
But domestic consumer demand remains weak, and the world’s largest auto market is struggling with a price war sparked by Tesla Inc (TSLA.O) in January, which has since seen 40% discounts on vehicles. It has spread to more brands.
In March, top industry bodies called on the auto industry and authorities to calm down “price-cutting hype” to ensure the industry’s healthy and stable development.
Friday’s statement aimed at boosting car consumption followed suit. “Local governments should not develop protectionist policies and should avoid vicious competition,” he said.
A separate statement on supporting sales of electronic products said the authorities will encourage scientific research institutions and market organizations to actively apply domestic artificial intelligence (AI) technology to improve the intelligence level of electronic products.
The move mirrored similar measures announced by authorities in recent months, but failed to lift the market, with shares in the China Automobile Stock Index (.CSI931008) falling 0.3% and the Electronics Stock Index (.CSI930652) falling by 0.3%. ) fell by 0.6% compared to the baseline increase of 0.1%. Index (.CSI300).
“Such support is unlikely to significantly boost consumption as people lack confidence in the economic recovery and remain generally reluctant to spend,” UBS said in a note on Friday.
Investors have said they are disappointed by China’s slowing growth in the second quarter and want stronger stimulus, with some pinning their hopes on a Politburo meeting later this month.
Reporting by Qiaoyi Li, Liz Lee and Brenda Goh. Additional reporting by Jason Xue.Editing: Tom Hogue and Muralikumar Anantharaman
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