Geoffrey Smith 

Investing.com — The Chinese government committed to a big fiscal stimulus package, aiming to revive a flagging economy badly hit in recent months by COVID-19 lockdowns.

Local newswires quoted the cabinet as saying it would implement 33 measures across six areas. These included a broader tax relief, increased credit for small and medium-sized businesses, and cuts in taxes on auto purchases.

The moves are the latest in a coordinated series of measures aimed at propping up the economy, coming after a modest easing of monetary policy on Friday, when the central bank cut its five-year prime rate – a benchmark for long-term mortgage loans – by 15 basis points.

Beijing prioritized the COVID-19 epidemic over its economy in the past two months. It has imposed severe and prolonged lockdowns on major cities like Shanghai, Zhenjiang, and Jilin (north-eastern Province). After reporting its highest daily count of new infections at the weekend, fears are mounting that Beijing could be next to experience the same fate.

Cabinet officials stated that they would provide 60 billion yuan ($9billion) to fund a reduction in the taxes for some passenger cars. While initial reports didn’t specify which cars, analysts have assumed that will refer to electric vehicles.  

It also stated that it desired an orderly rise in domestic air traffic. This has fallen to its lowest point since the beginning of 2020 because of various mobility restrictions.

Wire reports of the cabinet’s statement continued to hint at an unresolved tension between the desire to stimulate activity and the desire to control COVID.

The wires said the cabinet urged “relevant departments” to refine the package measures item by item as soon as possible, and announce their implementation, but added that they should ensure that the policies introduced “are in line with local realities.”

According to the news, the currency strengthened to the highest point against the dollar in just three weeks. The dollar had fallen 0.7% to 6.6524 Yuan by 7:45 ET (1145 GMT)