experts suggest launching an economic stimulus package to bring the economy back on track for expansionary growth
2024-09-23
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since the third quarter, the growth rate of major economic indicators has slowed down and the pressure to stabilize growth has increased.
on september 21, the china macroeconomic forum (cmf) released a macroeconomic analysis and forecast report. the report pointed out that china's macroeconomics continued to recover in the first three quarters of 2024, and the main driving force for recovery came from external demand, infrastructure and manufacturing investment. however, domestic effective demand is generally insufficient, especially the market-oriented endogenous demand is recovering slowly.
the report points out that on the one hand, macroeconomic policies must do a good job in expectation management and maintain everyone's confidence in the process of transformation from old to new growth drivers; on the other hand, they must also take into account the rhythm and sustainability and seek progress in stability.
yu ze, a professor at the school of economics of renmin university of china, analyzed that the quarterly slowdown in economic growth in the first three quarters was affected by seasonal and unexpected factors such as extreme weather disturbances, as well as the slow repair of the balance sheets of residents, enterprises and local governments, which led to a lack of confidence. however, the long-term gap between the growth rates of real gdp and nominal gdp, the continued serious low level of the real estate market, and the leading decline in consumption growth in first-tier cities prove that the current situation is not a simple confidence problem or cyclical problem, and requires more comprehensive research and judgment.
the report analyzes that there are three forces behind the operation of the macro economy in the first three quarters: the first is that the restoration of social order after the epidemic has driven the normalization of production and consumption; the second is the lack of endogenous total demand in the market; and the third is the accelerated implementation of the new development pattern to promote the solid advancement of high-quality development. since domestic demand is mainly driven by the restoration of order, but the endogenous driving force is insufficient, the driving force has declined quarter by quarter. at the same time, the new momentum that has emerged is still difficult to hedge and leverage the huge stock economy, resulting in a weak recovery in the overall economy.
looking ahead, the report pointed out that the fourth quarter economic work should adhere to the general tone of stability and progress, strengthen counter-cyclical policy guarantees, and use the reform dividends of the third plenary session of the 20th cpc central committee to accelerate the transformation of the economic operation model and the reshaping of the incentive mechanism of local governments. counter-cyclical policies maintain total easing, increase the intensity of proactive fiscal policies through the early issuance of special government bonds, and fiscal expenditures are more inclined towards public services for residents in new urbanization; monetary policy focuses on reducing the financing costs of financial institutions, further comprehensively reducing the reserve requirement ratio to replace the medium-term lending facility (mlf), stabilizing liquidity while reducing the liability costs of financial institutions.
a major bottleneck in the current economic operation is the lack of effective demand. how to boost demand further? liu shijin, former deputy director of the development research center of the state council, suggested at the forum that a package of stimulus and reform economic revitalization plans should be launched to drive the economy back to the track of expansionary growth. funds should be raised mainly by issuing ultra-long-term special government bonds, and an economic stimulus scale of no less than 10 trillion yuan should be formed within one to two years.
he believes that the stimulus plan should focus on filling the gaps in basic public services and start from two key areas: first, vigorously improve the basic public service level of new citizens in terms of affordable housing, education, medical care, social security, and elderly care. the short-term focus is for the government to purchase unsaleable housing, convert it into affordable housing, and provide it to new citizens. second, accelerate the construction of small and medium-sized towns within the metropolitan area, drive china's second wave of urbanization, and form a high-quality, sustainable, modern urban system based on urban-rural integrated development.
cai fang, chief expert of the national high-end think tank of the chinese academy of social sciences, suggested that the policy should be implemented and targeted from investors and enterprises to households. cai fang pointed out that the short-term subsidy policy for the household sector in the past two or three years should be transformed into a long-term mechanism. the reason is that china's economic development will be in a period of "double normal" superposition in the future - the new normal of economic development and the new normal of population development. under the trend of population aging and low birth rate, the suppression of residents' consumption willingness in the future may become a long-term factor affecting the expected economic growth target.
wang yiming, vice president of the china center for international economic exchanges, suggested that measures should be taken to release consumption potential, especially service consumption. the most important thing is to relax market access to meet the diversified consumption needs of middle- and high-income groups. wang yiming said that the recent notice on expanding the pilot opening-up in the medical field announced by the ministry of commerce and other three departments, which intends to allow the establishment of wholly foreign-owned hospitals in nine places including beijing, tianjin and shanghai, is a very positive signal of reform and opening up.
when it comes to stabilizing the real estate market, wang yiming pointed out that the supply side should implement the "guaranteed delivery of buildings", especially white-list projects, and implement the loan usage regulations and due diligence exemption guidelines to eliminate banks' financing concerns. proper isolation of corporate risks and project risks will also help increase banks' enthusiasm for providing loans. the demand side is mainly the acquisition of existing houses, promoting the implementation of the re-lending policy. it is also necessary to solve the problem of the interest rate difference between existing mortgage loans and incremental mortgage loans, which will play a positive role in stabilizing the real estate market.
(this article comes from china business network)
