The Chinese economy has significantly picked up, but different sectors have shown different performances: exports see stronger growth than domestic demands, production recovers better than demands, and the second industry is doing better than the tertiary industry...1/7
With the pandemic still posing risks, it is very likely that China’s net export will fall again in 2H20, while consumers are expected to remain cautious given the risk of virus striking back and income taking blows, future economic growth face mounting uncertainties...2/7
An outstanding problem in China is that financial institutions, especially banks, has been bearing huge burden as a result of the government’s drive to support #SMEs amid the #COVID19 outbreak...3/7
There is the possibility that financial risks will pile up high and these institutions cannot continue to support the real economy anymore...4/7
To solve the problem, policymakers should be prepared to deal with financial risks, and policy consequences should be shared among government finance, policy banks and the central bank rather than all placed upon commercial financial institutions to bear...5/7
Of course, it would be controversial to put the central bank in this especially given the hot debate on fiscal deficit monetization earlier, but at this special time of crisis, the central bank could be given more roles traditionally taken by the government...6/7
As long as this doesn’t become something regular we could give it a try, because it is at least better than putting all pressure on commercial institutions.
By Prof Huang Yiping: mp.weixin.qq.com/s/Z3elEH1lY1-Z… 7/7
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