China Ramps up Stimulus to Bolster Economy
regulation and optimized capital flow, a deluge of strong stimulus policies similar to those during the 2008 global financial crisis may not be needed.
Ping An Securities analyst Zhang Ming said the Chinese Government has stepped up its deleveraging campaign to defuse financial risks since 2016, and it will refrain from issuing a massive monetary and credit stimulus package.
China will also lean on fiscal stimulus to spur infrastructure investment and consumption, as stimulating domestic demand will play the main role in pumping up the economy, analysts said.
The meeting on April 17 called for more proactive fiscal measures with deficit spending such as issuing special government bonds to support the virus fight and increasing the issuance of local government bonds as well as raising the efficiency of capital utilization to help stabilize the economy.
Emphasizing the need to expand domestic demand, the meeting stressed the necessity to release the potential of consumption by stimulating consumer spending and increasing public spending as appropriate. It is also imperative to expand investment by way of renovating old and dilapidated residential areas, strengthening investment in traditional and new infrastructure to advance the upgrading of traditional industries, and boosting investment in emerging strategic industries.
Local government initiatives to roll out voucher programs, ensure employment and cut taxes and fees could help households and businesses tide over difficulties, prop up domestic demand and keep the economic fundamentals steady, according to Zhang Bin, a senior researcher at China Finance 40 Forum.
According to the World Economic Outlook report recently released by the International Monetary Fund (IMF), China is expected to be one of the few major economies that could see economic expansion this year. The global economy is expected to decline by 3 percent in 2020.
Domestic activity is expected to rebound and continue to recover in the second half of this year as the containment measures are withdrawn and policy support gains strength, Kenneth Kang, Deputy Director of the Asia and Pacific Department at the IMF, said.
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