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at the 2024 tsinghua pbc chief economist forum held on september 28, nomura china chief economist lu ting said in an interview with the paper that the direction of fiscal policy is equally important as the scale of the policy itself.

currently, discussions surrounding fiscal policy include how much room there is for efforts and the direction in which they should be exerted. lu ting believes that there are two constraints on the implementation of fiscal policy. first, there is concern about inflation. however, judging from the current low price data, the implementation of expansionary fiscal policy will not obviously lead to high inflation; second, the implementation of expansionary fiscal policy often requires an expansion of monetary policy. will this lead to depreciation of the rmb? but in fact, everyone has also seen that china has recently implemented an expansionary monetary policy, and the rmb exchange rate has rebounded. this is because the implementation of expansionary monetary and fiscal policies can bring higher economic growth and increase overall domestic assets. as prices rise, there will be an inflow of capital, which will lead to an appreciation of the rmb. "therefore, there is definitely room for implementing expansionary monetary and fiscal policies, and it is quite a bit of room."

when talking about how vigorously the expansionary fiscal policy should be implemented, lu ting believes that this issue should be combined with the direction of fiscal policy. if the direction of effort is better, relatively small fiscal expenditures may be needed. "expansion of fiscal policy can inspire confidence, but the degree of encouragement may be different. a good fiscal policy, a fiscal policy that can solve china's current practical problems, can enhance confidence to a great extent. at this time, the intensity of fiscal policy may not be enough." the need is too great, and the duration does not need to be long. "therefore, at present, the direction of fiscal policy and the scale of the policy itself may be equally important. we should take this opportunity to find a way to implement it at a low cost, with high efficiency, and in line with social equity. policies that can increase demand.

how to choose the direction of fiscal policy expansion? lu ting suggested that first of all, in the short term, the top priority is to ensure the basic operation of local governments and increase transfer payments by increasing the issuance of government bonds to raise some funds. don't let some inappropriate local government actions damage the confidence of enterprises, especially private enterprises.

in the short and medium term, we should do a good job in ensuring the delivery of housing, and ensuring the delivery of housing is better than purchasing and stockpiling. the most important system in china's real estate is the pre-sale system, which is the futures market. many people treat it as the spot market when making policy recommendations and believe that the problem of real estate is too many houses were built but not sold, but in reality too many houses were sold but not yet built. some official data may give the impression that there is a lot of inventory, but such inventory is often mortgaged and scattered among various properties, and is not a property that can be purchased by local governments in complete sets. the problem that needs to be solved is the market failure and government failure in the pre-sale system. to ensure that house buyers can get the house, this is the most important for rebuilding market confidence. the most important debt chain in the real estate industry is not between real estate developers and banks. , but between developers and home buyers, it is necessary to clear the market and rebuild confidence, so that the real estate market can stop falling and stabilize.

lu ting suggested that a better way is to conduct systematic statistics and screening of the properties with guaranteed delivery problems by category. some of the properties with too low sales rates may be refunded, and some may be self-rescued by developers and supported by whitelists. another part may need to be solved through capital injection through central finance, similar to the project to rescue bankrupt enterprises. in the process of guaranteeing the delivery of housing, it will inevitably involve a building that has been completed but has unsold houses. this is something that can be done by purchasing, storing and guaranteeing housing. "we should focus on guaranteed housing and do a good job in collecting, storing and affordable housing, instead of ignoring the problem of guaranteed housing."

lu ting also suggested that another direction of fiscal policy is to provide subsidies to specific groups of people, including increasing the pension level of farmers. the implementation cost of this policy is very low, but at the same time it can bring higher benefits, not only from social from the perspective of fairness, including from the perspective of economics, this is a good way to increase fiscal expenditure, improve the structure of consumer demand, reduce the level of savings to a certain extent, and make society more harmonious.