While #China’s fiscal policies should remain active amid ongoing #trade frictions andslowing down domestic demand,specific measures should focus on maintaining a steady growth of “broad credit” according to cf40 senior fellow Zhang Bin.
An equation for “broad credit”,according to him,is “social financing - equity
financing + national debt + general debt of local govnt.”
While maintaining steady growth of “broad #credit” has generally been regarded as a monetary approach, govnt spending is now critical to stabilizing #Chinese #macroeconomy. baijiahao.baidu.com/s?id=163993710…
One reason is the lack of growth momentum of household credit. Firm sector credit is also slowing down amid ongoing #economic restructuring. Such a scenario could last for some time, which would need a steady growth in broad government #debt.
In the meantime, however, #fiscal spending should be based on a proper spending structure, otherwise problems would not be able to be solved. Instead of subsidizing producers, government should find out ways to encourage more consumer spending to increase domestic demand.
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