Key points:
1.China, the world’s second-largest economy, continues to face challenges due to a downturn in the real estate sector and weak consumer confidence.
2.Analysts at Goldman Sachs have indicated that the likelihood of China failing to achieve its full-year GDP growth target of approximately 5% is increasing, which in turn raises the need for additional demand-side stimulus measures.
3.Xu Gao, the chief economist at Bank of China International, emphasized that the existing policies aimed at stabilizing the property market are insufficient to address the ongoing issues.
As the recent record goes, for the stirring of the economy, measures are prescribed by even economists within China.
Former Development Research Center vice president Liu Shijin, under the State Council, has suggested that China needs to issue at least 10 trillion yuan about $1.42 trillion in ultralong government bonds over the next year or two to invest in human capital.
During a speech at the China Macroeconomy Forum at Renmin University, Liu underscored the fact that comprehensive stimulation and reform of the economy are in dire need, keeping in mind the issue of drastically raising demand. “These migrants face sharp challenges in finding shelter and earning a living in cities,” he explained, cautioning against adopting similar stimulus measures, like a simple cut in interest rates, to those taken by developed economies because China is not experiencing a comparative slowdown.
China’s economy, the world’s second-largest, has struggled with a downslide in its real estate market and poorer-than-expected consumer confidence since a disappointing recovery from the Covid-19 pandemic last year. More recently, official data has shown factory output growth slowing, though exports have fared a little better.
Goldman Sachs just cut its full-year growth forecast for China to 4.7% from an earlier estimate of 4.9%. This, the analysts said in a note dated September 15, reflects recent data trends and delayed impacts of fiscal policy. What’s more, the economists say that there is now an increasing risk that China might fall short of its full-year GDP growth target of about 5%, highlighting the need for more demand side easing measures.
In July, the much anticipated Third Plenary Session by China’s top leaders restated existing policies and pledged to meet the full-year targets set in March. Beijing has since unveiled a slew of more targeted measures to spur the economy.
