China's Response to Macroeconomic Risks: Stimulus Should Exceed 10 Trillion Yuan
China's Shift in Economic Strategy
In a striking announcement, economist Liu Shangxi from the Chinese Academy of Fiscal Sciences advocated for a stimulus exceeding 10 trillion yuan to combat macroeconomic risks. He expresses concern over the potential for the economy to "fall off a cliff" without extraordinary measures to bolster domestic demand.
Need for Unconventional Measures
As China grapples with a national property crisis and signs of deflation, traditional fiscal caution is being re-evaluated, with a notable focus on increasing the central government’s debt. Liu warns, “Only when the economy is revitalised can the risk be truly reduced.”
Implications of Increased Stimulus
- Liu asserts that stimulus measures should focus on addressing the national property crisis through debt relief and emergency fiscal strategies.
- Recent government statements indicate a willingness to raise the fiscal deficit and provide substantial support for ongoing urbanisation.
- More treasury bond purchases are recommended to manage the economy effectively.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.