China unveiled a massive stimulus for its economy, but failed to address this crucial part
Chinese economy out of crisis.
Need for fiscal welfare quite urgent
Tianlei Huang from the Peterson Institute emphasizes that the government has not sufficiently invested in consumer welfare, which is critical for economic recovery. «This economy has many deep, structural, fundamental problems that cannot be turned around just simply by a package,” he noted.
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China faces a deflationary spiral driven by weak domestic spending and a troubled real estate sector, which constitutes about 30% of GDP but suffers from debt and unsold inventory. Huang argues for a shift in government focus toward consumer spending rather than just infrastructure. He believes addressing the housing market’s downturn is vital for restoring consumer confidence.
Is it too late recover the Chinese economy this year?
However, concerns remain that these initiatives may be too late to impact this year's growth, with economists speculating China might miss its 5% target. Huang warns of a lag between bond announcements and actual spending, particularly as winter approaches, which could slow activity.
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