Analysts Push for Rate Cuts and Spending Surge to Revive Demand
A new report from the China Finance 40 Forum (CF40) is turning heads with its urgent call for stronger fiscal measures to boost China’s economic demand. 📊 The think tank argues that policymakers must accelerate interest rate cuts and ramp up government spending to avoid long-term risks like rising bad loans and sinking bank margins.
Rate Reductions vs. Bank Risks: What’s At Stake? 🚨
While China has already slashed key rates this year—including a 60-basis-point drop in the mortgage-linked Loan Prime Rate (LPR)—analysts warn that hesitation now could backfire. CF40 senior fellow Zhang Bin insists that fears over bank profitability shouldn’t delay action: \"The central bank can address troubled institutions,\" he says. 💡
Spending Hike: The Magic Number? 💸
The report suggests government spending must outpace combined GDP and inflation targets. If China aims for 5% GDP growth and 2% inflation in 2024, broad fiscal spending should jump by over 7%—a move reminiscent of pre-pandemic growth rates exceeding 10%. 🔍
Experts Optimistic About Policy Momentum 🚀
CF40’s Guo Kai doubled down on the need for bold fiscal-monetary coordination, urging a \"nominal GDP target\" to navigate low-rate challenges. Analysts believe the recent policy package, if implemented effectively, could lay the groundwork for sustainable growth. 🌟
