Pedestrians on Nanjing Road shopping area in Shanghai, China, on Wednesday, Aug. 7, 2024. Photographer: Qilai Shen/Bloomberg
CHINA's policymakers should step up economic stimulus measures in the remainder of the year, including expanding the budget deficit and distributing more money directly to households to boost spending, in a bid to prop up the world's second-largest economy amid several headwinds, said a renowned economist.
Zhang Yansheng, former secretary-general of the Academic Committee of the National Development and Reform Commission, said the broader economy is facing pressures and challenges from lackluster demand and weakening expectations, highlighting the need for a package of stimulus measures to significantly boost domestic demand in the short term.
Zhang, who is also a researcher at the Chinese Academy of Macroeconomic Research, said the country can raise its budget deficit ratio to support the economic recovery, while cash handouts will be an immediate and effective way to boost spending.
"It is advisable for the government to announce cash handouts for people," he told China Daily in a recent exclusive interview. "Directly backing households can strongly boost confidence among consumers and revitalize people's expectations. That will significantly bolster household consumption and prop up economic growth." Zhang's views were echoed by Li Daokui, director of Tsinghua University's Academic Center for Chinese Economic Practice and Thinking, who suggested that the government should issue consumption coupons worth 1 trillion yuan ($140 billion) during the weeklong National Day holiday in October this year.
Consumption played a major role in propelling growth in the first half of this year, with final consumption contributing to over 60 percent of China's economic growth, or 3 percentage points to the GDP growth rate, NBS data showed.
In a bid to further boost domestic demand, China has announced that it would allocate around 300 billion yuan in ultra-long-term special treasury bonds to support the program of driving large-scale equipment upgrades and trade-in deals for consumer goods.
According to the document jointly released by the National Development and Reform Commission and the Ministry of Finance last month, about half of the bond funds will be used for supporting trade-in deals for consumer goods.
To further bolster the economy, Zhang said more efforts are also needed to stabilize foreign trade and investment and deal with the property woes.
When it comes to expanding high-standard opening-up, he highlighted the importance of enhancing strategic mutual trust with other countries, especially those having close and heavy economic and trade relations with China.
He noted many foreigners say the process of obtaining visas involves complex and cumbersome documentation and long waits for interviews. "It's not easy for many foreign friends to come to China. We are working hard, but we are far from doing enough." On the property front, Zhang said the current problem in real estate is its abnormal development, adding that "it is impossible to drive a country's economy only by the property sector".
He emphasized the need to establish a long-term mechanism for the smooth functioning of the real estate sector and a new development model, saying more efforts should be made to establish a fiscal relationship between the central and local governments that features well-defined powers and expenditure responsibilities. - China Daily/ANN
