In less than 12 months, the Chinese government convened four national meetings on the pig industry. Why does China conduct such dynamic studies and update related policies so frequently? Said CF40 member Lu Feng, 1/6 cf40.org.cn/uploads/newsle…
The moves were against a back drop of rare fluctuations in live pig supplies and the pork market. Pork price in China rose by more than 70% over the past six months,while the year-on-year growth rate in late August climbed to as high as 53.3% 2/6
The recent steep rise in pork price is expected to continue unless unusually strong and effective measures are rolled out. 3/6
As poultry is the substitute for #Pork, a surge in pork price has indeed pushed the prices of poultry and other types of meat up to different extents.4/6
Chicken prices increased by 17.8% over the past two years, with an 8.6% year-on-year growth in July, 2019. It’s believed that the surge in pork prices is an important reason for this, among others.5/6
The interaction between supplies and demands of pork is usually cyclical; however,
the recent price hike is different. As the demand for pork remains relatively stable, it’s inferred that supply-side
changes are the major cause for the abnormal surge in pork price.6/6
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According to CF40’s latest macroeconomic quarterly report ‘China's Countercyclical Fiscal Policy and Sustainability of Government Debt’, China has never heavily relied on budgetary spending to provide counter-cyclical stimulus. 1/5
Instead, it mainly adopts a model where local governments, financial institutions and local government financing vehicles work together to boost investment. 2/5
Statistics show that such a model has helped China stabilize its economic growth, but also increased the broad government debt to GDP ratio, raising concerns about the sustainability of government debt. 3/5
China could consider implementing negative individual income tax (IIT) to boost consumption and employment, advises CF40 research department. 1/4
It means that the government provides taxpayers with a certain amount of subsidy when the level of working income is lower than a given threshold. 2/4
A CF40 policy brief proposes a two-pronged policy scheme consisting of rewards and subsidies for businesses adding new jobs on one hand, and negative IIT on the other hand, which could drive spending and employment without causing excessive fiscal expenditure burdens. 3/4
The PBC's "benign neglect," an indirect policy tool devised in 2022 to influence the value of the RMB, was quite successful. It allows the market to determine the exchange rate while retaining capital controls as a last resort.1/5
It should be the most effective currency strategy for China's central bank, said CF40 Advisor Yu Yongding in a recent seminar.2/5
China should maintain a floating exchange rate regime to bring out its role as an automatic stabilizer while maintaining necessary capital control as a last resort.3/5
Despite the shrinking working-age population, there is a tremendous pool of surplus rural labor in China., said Caifang, Chief Expert of National Think Tank of Chinese Academy of Social Sciences. 1/5
Many analysts predict that China will not have a rapid growth rate in the future or emerge as the largest economy in the world because its working-age population and total labor have stopped growing. 2/5
23% of the total labor in China are rural labor. In comparison, the percentage in highincome economies is only 3% or 4%. That means China needs to transfer 20% of its labor from rural to urban industries, which is huge given China’s enormous population. 3/5
#China could consider implementing negative individual income tax (IIT) to boost consumption and employment, suggests CF40 Research Department in a 2022 policy brief ‘Negative Individual Income Tax: Some Thoughts on Policies to Drive Employment and Consumption’. 1/4
It means that the government provides taxpayers with a certain amount of subsidy when the level of working income is lower than a given threshold. 2/4
The policy brief proposes a two-pronged policy scheme consisting of rewards and subsidies for businesses adding new jobs on one hand, and negative IIT on the other hand, which could drive spending and employment without causing excessive fiscal expenditure burdens. 3/4
Given China’s macroeconomic environment in December 2022, the following policies should be taken to boost China’s economic growth and deal with potential risks, said ZHANG Bin, CF40 Nonresident Senior Fellow: 1/5
1. Lower interest rate by 25 bps each time until the employment and growth targets are hit. 2. Issue new types of fiscally subsidized bonds and policy loans to support investment in public goods and quasi-public goods infrastructure projects that feature limited returns.2/4
3. Set up special funds to help market entities battered during the pandemic get back on their feet; increase the amount of living allowance for low-income groups. 3/5