Infrastructure investment could still be the main driver of China’s economic growth amid ongoing economic recovery from the #COVID19 : new.cf40.org.cn/uploads/202007… 1/6 #stimuluspackage
China’s fiscal deficit target in 2020 is 3.6%, but the actual intensity of expansionary policies might be higher. 2/6
About 3 trillion yuan in total public budget revenue of 2020 is carry-forwards and transfers from 2019. After deducting the 3 trillion yuan, gap between public budget expenditure &actual fiscal revenue will be 6.76 trillion yuan indicating the need for more powerful stimulus 3/6
One thing that deserves attention is the multiplier effect of fiscal deficits or fiscal spending, which could be quite limited as a large amount of funds injected has been used to fight against the virus and help tackle people’s livelihood difficulties. 4/6
Infrastructure investment has a crowding-in effect, which can encourage private companies to seek investment opportunities and thus truly help stimulate the economy. 5/6
If we fail to use fiscal expenditure properly and simply focus on rescue efforts,real economic growth might be lower than expected.Fiscal revenue could also be lower than expected at the end of 2020, leading to a much larger fiscal deficit in 2020 than originally expected. 6/6
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