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Business Times
11-07-2025
- Business
- Business Times
PBOC adviser urges 1.5 trillion yuan stimulus to counter US tariffs
[BEIJING] China should add as much as 1.5 trillion yuan (S$268 billion) in fresh stimulus to boost consumer spending and maintain currency flexibility to counter US tariffs' drag on growth, academics including an adviser to the country's central bank said. The Chinese economy has been facing 'new disruptions' since April, when US levies jumped, in addition to persistent deflation, Huang Yiping, a member of the monetary policy committee of the People's Bank of China (PBOC), and two other experts wrote in a report published on Friday (Jul 11). 'To address these evolving challenges, China must adopt a more forceful counter-cyclical approach to maintain stable growth, while advancing aggressively with structural reforms,' said the authors, who include Guo Kai, a former PBOC official, and Alfred Schipke, director of the East Asian Institute at the National University of Singapore. The authorities should consider an additional one trillion yuan to 1.5 trillion yuan package over 12 months to lift household consumption to mitigate damages on the economy from 20 to 30 per cent US tariffs, they wrote. That compares with 300 billion yuan that central authorities plan to borrow this year by selling ultra-long sovereign special bonds to subsidise consumer purchases in its flagship initiative to boost spending. Economists broadly expect Beijing to ease policies further in the coming months to shield the economy from a potential slump in exports due to US President Donald Trump's tariffs and Washington's tightening scrutiny over the rerouting of Chinese shipments. Domestically, the property market is still struggling and deflationary pressures are building as businesses cut prices to keep customers. Huang and his colleagues also see room for the PBOC to cut policy rates further and guide banks to lower the Loan Prime Rates to help bolster expectations of stronger nominal growth, which is key for corporate profits. They suggest that the central bank to maintain 'sufficient' flexibility in the yuan to absorb future external shocks. Over the longer term, the government needs to expand the personal income tax base and simplify value-added tax structures in part of the reforms to ensure fiscal sustainability, they said. They also called for managing risks associated with loans to small- and medium-sized enterprises (SMEs) to free up banks' capacity to extend new credit to more productive sectors. After years of policies to encourage lending to SMEs and extended repayment deadlines, outstanding loans to the group now exceed 60 per cent of China's gross domestic product, up from 37 per cent in 2019 and surpassing exposures to local government financing vehicles, they said. BLOOMBERG
Yahoo
11-07-2025
- Business
- Yahoo
PBOC Adviser Urges $209 Billion Stimulus to Counter US Tariffs
(Bloomberg) -- China should add as much as 1.5 trillion yuan ($209 billion) in fresh stimulus to boost consumer spending and maintain currency flexibility to counter US tariffs' drag on growth, academics including an adviser to the country's central bank said. Singer Akon's Failed Futuristic City in Senegal Ends Up a $1 Billion Resort Are Tourists Ruining Europe? How Locals Are Pushing Back Can Americans Just Stop Building New Highways? Why Did Cars Get So Hard to See Out Of? How German Cities Are Rethinking Women's Safety — With Taxis The Chinese economy has been facing 'new disruptions' since April, when US levies jumped, in addition to persistent deflation, Huang Yiping, a member of the monetary policy committee of the People's Bank of China, and two other experts wrote in a report published Friday. 'To address these evolving challenges, China must adopt a more forceful counter-cyclical approach to maintain stable growth, while advancing aggressively with structural reforms,' said the authors, who include Guo Kai, a former PBOC official, and Alfred Schipke, director of the East Asian Institute at the National University of Singapore. The authorities should consider an additional 1-1.5 trillion yuan package over 12 months to lift household consumption to mitigate damages on the economy from 20%-30% US tariffs, they wrote. That compares with 300 billion yuan that central authorities plan to borrow this year by selling ultra-long sovereign special bonds to subsidize consumer purchases in its flagship initiative to boost spending. Economists broadly expect Beijing to ease policies further in the coming months to shield the economy from a potential slump in exports due to US President Donald Trump's tariffs and Washington's tightening scrutiny over rerouting of Chinese shipments. Domestically, the property market is still struggling and deflationary pressures are building as businesses cut prices to keep customers. Huang and his colleagues also see room for the PBOC to cut policy rates further and guide banks to lower the Loan Prime Rates to help bolster expectations of stronger nominal growth, which is key for corporate profits. They suggest the central bank to maintain 'sufficient' flexibility in the yuan to absorb future external shocks. Over the longer term, the government needs to expand the personal income tax base and simplify value-added tax structures in part of reforms to ensure fiscal sustainability, they said. They also called for managing risks associated with loans to small- and medium-sized enterprises to free up banks' capacity to extend new credit to more productive sectors. After years of policies to encourage lending to SMEs and extended repayment deadlines, outstanding loans to the group now exceed 60% of China's gross domestic product, up from 37% in 2019 and surpassing exposures to local government financing vehicles, they said. Will Trade War Make South India the Next Manufacturing Hub? Trump's Cuts Are Making Federal Data Disappear 'Our Goal Is to Get Their Money': Inside a Firm Charged With Scamming Writers for Millions 'Telecom Is the New Tequila': Behind the Celebrity Wireless Boom For Brazil's Criminals, Coffee Beans Are the Target ©2025 Bloomberg L.P.
South China Morning Post
02-07-2025
- Business
- South China Morning Post
China's real consumption ‘far from as low as it seems' – think tank bucks market consensus
China's actual consumption power may have already surpassed that of Mexico and reached 40 to 50 per cent of the levels seen in developed nations such as Japan and Germany, a Beijing-based think tank contends. That conclusion, put forth by China Finance 40 Forum, which comprises senior Chinese regulators and financial executives, runs contrary to the market consensus that China's consumption is underdeveloped, while providing a new perspective from which to assess the consumer potential of the world's second-largest economy. The research report came as Beijing has been rallying efforts to rev up China's domestic market as an economic growth engine amid a trade war with Washington. But market analysts have raised concerns that consumption could run out of steam, pointing to the waning impact of a trade-in programme , and to the weakened purchasing power of residents troubled by job insecurity. 'Mainstream metrics have systematically underestimated China's consumption level,' two of the think tank's research fellows, Guo Kai and Yu Fei, wrote in the report, posted online on Friday. Despite being the world's second-largest consumer market, after the US, China's per capita spending before adjustment is only 8.8 per cent of what Americans spend, about half of what Mexicans spend, about a quarter of what Japanese spend, and 18 per cent of what Germans spend, the report said, citing World Bank data. It looks a bit better when adjusted for purchasing power parity – an international metric that compares the relative economic strength of countries by equalising the purchasing power of their currencies. By this measurement, China's level is 17.1 per cent of US consumption, 35.3 per cent of Japan's, 59.6 per cent of Mexico's, and 28.5 per cent of Germany's.
