China says it will step up support for economy, boosting markets

© Reuters. FILE PHOTO: People wearing face masks walk past a street amid snowfall, following the coronavirus disease (COVID-19) outbreak, at a shopping area in Beijing, China March 17, 2022. REUTERS/Tingshu Wang

BEIJING (Reuters) - China will step up policy support to stabilise the economy, including its embattled internet platforms, as domestic COVID-19 outbreaks and the Ukraine war raise risks, a top decision-making of the ruling Communist Party said on Friday, lifting markets.

Chinese policymakers face an uphill battle to ward off an economic slowdown that threatens job losses in a politically sensitive year, as COVID-19 lockdowns disrupt supply chains and jolt businesses.

Friday's state media reports on the much-anticipated meeting of the Politburo sent Chinese shares prices surging, especially among Internet stocks that have been battered by last year's clampdown on the so-called "platform economy".

China will adopt a package of policies to help COVID-hit industries and small firms, state media reports said, citing the Politburo meeting chaired by President Xi Jinping.

"The COVID-19 and Ukraine crisis have led to increased risks and challenges. The complexity, severity and uncertainty of China's economic development environment have increased," the Politburo was quoted as saying by the official Xinhua news agency.

"Stabilising growth, employment and prices are facing new challenges. It is very important to do a good job in economic work and effectively protect and improve people's livelihood," Xinhua reported.

Financial markets were hit hard over the past two weeks on fears that lockdowns in China would cause severe damage to its economy and derail a global recovery just as many countries are rebounding from the pandemic-led slumps.

China's benchmark index jumped more than 2%, with tech-focused STAR50 Index surging more than 4%. Shares of Hong Kong-listed tech firms rose, with the Hang Seng Tech Index up more than 7%.

"We should promote the healthy development of the platform economy, complete special rectification of the platform economy, implement normalised supervision, and introduce specific measures to support the standardised and healthy development of the platform economy," Xinhua cited the Politburo as saying.

Still, the Politburo said authorities will continue to implement the controversial dynamic zero-COVID policy to control the outbreaks while minimizing the impact on the economy.

China will expand domestic demand, boost investment and speed up infrastructure construction, the Politburo said, vowing to ensure smooth transportation, logistics, and supply chains.

On Tuesday, Xi chaired a top-level meeting that announced a big infrastructure push to boost demand, reinforcing Beijing's preference for big-ticket projects to spur growth.

China will strive to keep economic growth within a reasonable range and achieve social and economic targets for 2022, the Politburo said.

Analysts believe more stimulus measures will be needed if the government wants to meet its 2022 growth target of around 5.5%.

"We should accelerate the implementation of policies, implement tax rebates, tax and fee cuts and other policies, and make good use of all kinds of monetary policy tools," it said.

It will also back healthy development of the property market, and ensure stable operations of capital markets, while guarding against systemic risks.