China said it will give one-off cash handouts to people in extreme poverty before Oct 1, in a rare announcement of direct aid just a day after unveiling a sweeping program to stimulate the world’s second-largest economy.
The Ministry of Finance and Ministry of Civil Affairs will issue living subsidies to disadvantaged groups including the very poor and orphans before the National Day holiday next week, the state broadcaster CCTV reported Wednesday, without providing details.
Local authorities should ensure the funds reach their target recipients before Oct 1, the anniversary of the founding of the People’s Republic, to show “the party and the government’s love and care for people in need”, the report said.
While the amount is unknown, the deployment of one-time handouts within such a short period of time appears to be a departure for a government that has long eschewed what President Xi Jinping calls welfarism. The announcement came shortly after the country’s top monetary and financial officials revealed a series of rate cuts and easing measures aimed at arresting an economic slowdown.
Meanwhile, the central government instructed to provide certain social security benefits for college graduates who haven’t found a job two years after leaving school in an effort to boost employment, the official Xinhua News Agency reported Wednesday, citing guidelines issued by the State Council, China’s cabinet.
The living subsidy is a one-off show of Xi’s attention to the most-disadvantaged groups before the 75th anniversary of the Communist Party’s founding of the People’s Republic of China, said Neo Wang, Evercore ISI’s New York-based managing director for China research.
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“As to the social security subsidy, the rollout is aimed at maintaining social stability before the holidays,” he added.
China’s ministries budgeted 154.7 billion yuan ($28.35 billion) for financial assistance and subsidies to people in extreme poverty, orphans and the homeless this year, according to a government notice in April. The country has 4.74 million people living in extreme poverty as of June, according to the Ministry of Civil Affairs.
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The National Day is one of the most important holidays in China that usually see massive traveling and consumption. But a property sector slump and gloomy job market have weighed on spending, leading some economists to call for more direct fiscal intervention to lift sentiment.
Huang Yiping, a member of the People’s Bank of China’s monetary policy committee, urged the government to step up spending to address weak consumption in a rare critique of China’s economic policies earlier this year. Cash handouts to households would boost consumer spending, he said, while an excessive focus on fiscal health could hinder the economy.
With the central bank surprising the market with its broad package of monetary stimulus measures, the spotlight now is on the Ministry of Finance. More fiscal measures could come in the next few days as Xi’s 24-member Politburo is set to meet ahead of the week-long holiday.
Chart: Bloomberg
