China is facing increasing demands for economic stimulus as state media outlets and government advisers advocate for further monetary policy easing. Prominent economists and analysts have expressed their opinions on the need for supportive measures to revive consumption and boost investment in the country. Calls emerge as officials are launching new mesures to support sectors such as new energy vehicles (NEVs).
In a series of front-page articles, China’s major state-run securities newspapers including China Securities Journal, Shanghai Securities News and Securities Daily, highlighted the likelihood of the central bank implementing additional monetary policy measures. These reports cited well-known economists who emphasized the importance of monetary easing. The aim is to address the asymmetrical recovery process, wherein the rapid improvement of supply contrasts with the lack of demand and the potential deterioration of profit restoration in certain sectors.
In the details, experts more cuts to interest rates and the reserve requirement ratio in H2 and also proposed the implementation of structural monetary policy tools, such as relending programs, to support sectors like hi-tech manufacturing.
Meanwhile, according to Xinhua, Wang Huning, the No. 4 official in China’s ruling Communist Party, held a meeting with representatives from other Chinese political parties to discuss policy suggestions on reviving consumption. Wang emphasized the significance of consumption in achieving Chinese-style modernization and high-quality development. He stressed that restoring and expanding consumption is essential for economic growth and urged for a focus on investigation, research, and collaboration to enhance research capabilities and negotiation levels.
In the meantime, in an interview with 21st Century, Liu Yuanchun, a renowned economist with prior consultations with top officials including President Xi Jinping, called for interest rate cuts and additional support measures to stimulate investment. Liu highlighted the need for banks to further reduce loan rates to promote investment. He also suggested easing restrictions on property loans and purchases in certain cities, as well as providing financial support to leading real estate developers.
*Bottome line: There is a growing consensus among economists, government advisers, and state media in China for the need to implement further economic stimulus. The focus is primarily on monetary policy easing, including interest rate cuts, reductions in the reserve requirement ratio, and the utilization of structural tools. These measures are expected to revive consumption, boost investment, and drive the country’s ongoing recovery process towards Chinese-style modernization and high-quality development.