Asia watching China’s policy push closely as economies brace for spillover
Subscribe to enjoy similar stories. Asia is scrutinizing China’s unprecedented efforts to keep its economy humming. If Beijing doesn’t succeed, the fallout will ripple across the region, just as economies there get onto firmer ground.
China’s been an engine of regional growth for the past three decades, but its mounting economic woes have cast a shadow over its neighbors. As China’s top leaders get serious about reviving the economy, Beijing’s next policy steps could determine if it will again be a regional tailwind. For regional economies, it’s not about whether China manages to hit its growth target but whether it stabilizes or veers toward a further slowdown, analysts say.
“The type of China stimulus matters," Nomura analysts said in a note. Rather than splashy stimulus that delivers a “sugar hit" to get to 5% annual growth, what the rest of Asia really wants is support that targets structural challenges in China’s economy, said Harry Murphy Cruise, economist at Moody’s Analytics. China’s policy blitz is viewed as a positive step, particularly as officials have made the right noises about sagging domestic demand and long-brewing problems like youth unemployment.
Saturday’s finance ministry meeting stoked hopes for more fiscal stimulus but a lack of details continues to feed doubt about what Chinese recovery efforts mean for the region. “The package fell short of bold policies to prop up consumption, the property and private sectors," CreditSights analysts Zerlina Zeng and Karen Wu said in a note. Asia’s wish list includes: striking a better balance of budget responsibilities between local and central governments, putting a floor under property prices, and ensuring households have the confidence to spend, Cruise said.
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