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Experts suggest that China should invest up to Rmb10tn ($1.4tn) in stimulus funds over the next two years to boost its economy and counter deflationary pressures.
They recommend that the stimulus focus on social welfare spending for households rather than infrastructure projects, as households have been cutting back on spending and increasing savings.
China’s economy is facing challenges due to deflationary pressures, with the producer price index in deflationary territory for the past 23 months.
Experts estimate that issuing Rmb10tn in stimulus funds could help eliminate deflationary pressures and push nominal economic growth above 5% in the coming years.
Various economists have different views on the amount of stimulus needed, ranging from Rmb3tn to Rmb10tn, depending on the goal of the stimulus.
China has announced some measures to boost confidence and consumption, but experts believe that a larger stimulus package may be necessary to rebuild confidence in the economy.