#China’s #GDP growth rate in Q2 remained within the official target range set earlier this year, though still dropped to 6.2% from 6.4% in Q1. Behind this, 1. #consumption growth has been under pressure with nearly zero increase in middle class income;
2. #Manufacturing #nvestments have been at low level while debt pressure has been high at local governments. High financing cost along with squeezing effects during economic slowdown has also hindered private investment activities.
3. As the effect of “#export rush” fades, export has tended to slow down amid ongoing China-US #trade friction and slowing global #economy. From a recent speech by economist Li Xunlei: mp.weixin.qq.com/s/PtaJo2OBvaNG…
His suggestions for policymakers for the second half this year are:
a.Further cut real interest rate to reduce financing cost for #SMEs, which can help increase employment and income, in particular middle- and low- income group.
b.Promote the balanced development of society through government transfer payment for enterprises and households.
c. As aging population continues to grow, leverage level of the whole society would inevitably grow. This may require an increase in the leverage rate of the central government to offset the rise of #debts of household and enterprise sector.
d. Further improving social welfare for residents to encourage consumption. This could be achieved by transferring state-owned capital to social welfare funds.
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