China ought to initiate a stimulus package of at least 10 trillion yuan (US$1.42 trillion) within a year or two, according to a former top government adviser. Liu Shijin, the erstwhile deputy director of the State Council’s Development Research Centre, has made this suggestion as China contends with waning domestic demand and an extended property slump.
The proposed stimulus should be predominantly financed by ultra-long-term special bonds. Liu emphasised this at the China Macroeconomy Forum, hosted by Beijing’s Renmin University on Saturday. The initiative aims to address gaps in basic public services.
“A crucial aspect is to substantially enhance basic public services for new citizens, especially rural migrant workers relocating to urban areas. This covers sectors like affordable housing, education, healthcare, social security, and elderly care,” Liu mentioned.
He further highlighted the necessity for the stimulus plan to align with demand-side structural reforms. The synergy would then boost consumption, stabilise growth, and mitigate risks. This includes a stimulus scale of 10 trillion yuan.
Contents
Key Focus Areas
The necessity for a comprehensive stimulus package stems from the current economic challenges China faces. Weakening domestic demand and a prolonged property sector slump have been primary concerns. The intended stimulus should be channelled into pivotal sectors to drive growth.
Basic Public Services
Liu Shijin emphasised improving basic public services. Especially for new citizens, like rural migrant workers. The focus areas include:
- Affordable Housing: Ensuring accessible housing options.
- Education: Enhancing educational facilities and opportunities.
- Healthcare: Strengthening healthcare services.
- Social Security: Providing robust social security measures.
- Elderly Care: Improving elderly care services.
Funding Strategy
According to Liu, the stimulus should be financed through ultra-long-term special bonds. This approach mitigates immediate fiscal pressure and allows for sustainable funding over the years.
Importance of Demand-Side Structural Reforms
The stimulus plan must closely coordinate with demand-side structural reforms. The combined effect will be crucial in boosting consumption, stabilising economic growth, and mitigating potential risks. This balanced approach aims to ensure long-term sustainability and economic health.
For further reading on the topic, you may refer to related sources such as BBC News and The Guardian.
Conclusion
In conclusion, China faces pressing economic challenges. A well-coordinated stimulus package, focusing on essential public services and structural reforms, is instrumental. This would not only boost domestic demand but also stabilise economic growth in the long term.
