China plans 'great efforts' to consolidate economic recovery

China will make great efforts to consolidate its economic recovery particularly in the crucial third quarter, putting a priority on stabilising employment and prices, state media reported on Friday after a regular cabinet meeting.

The world's second-biggest economy narrowly missed a contraction in the second quarter, growing just 0.4% year-on-year, weighed down by COVID-19 lockdowns, a weak property sector and cautious consumer sentiment. The government has set a 2022 growth target of around 5.5%.

Major hurdles in the second half include China's persistent zero-Covid policy that entails curbs and restrictions that could again disrupt local businesses, employment and consumption. To spur growth, authorities have dusted off an old playbook, issuing debt to fund big infrastructure projects.

"We will make great efforts to consolidate the foundation of economic recovery, strive to stabilise the economy and keep the economic operation within a reasonable range, give priority to ensuring the achievement of the goal of stabilising employment and prices," state media quoted the cabinet as saying.

The nationwide survey-based jobless rate eased to 5.5% in June from 5.9% in May, but youth unemployment hit a record 19.3%. Blue-collar migrant workers were also forced to leave cities and return home due to job losses. 

The consumer price index (CPI) rose 2.5% from a year earlier in June, the highest in 23 months, reflecting imported pressures despite China's domestic price controls. 

To fund infrastructure projects and support growth, authorities have given policy banks 800 billion yuan ($118 billion) in new credit quotas and allowed them to issue 300 billion yuan in bonds.

There is still considerable room for policies, such as financing instruments via policy banks, to play a role in boosting investment, the cabinet was quoted as saying.

Local governments were urged to speed up construction of infrastructure projects and create employment opportunities for migrant workers, state media said.

At the end of June, 90.7% of migrant workers who returned to the provinces had found jobs, an official at the agriculture and rural affairs ministry said this week, without giving a specific number for those who remained jobless.

Financial institutions should make flexible arrangements for consumer loans for people affected by COVID, and efforts will be made to ensure stable development of the property market, the cabinet said.

It reaffirmed support for the healthy development of the country's online platform economy, enabling internet providers of services from shopping, food delivery and ride-hailing to play a better role in creating jobs.

($1 = 6.7578 Chinese yuan renminbi)