The policies implemented and promised by the Politburo in China fall short of the country’s economic needs. Despite the positive reaction from financial markets, including stock rallies and increased oil prices, the measures taken so far have not been sufficient to address China’s economic challenges.
The recent emphasis on “moderate” monetary policy, as opposed to the previous “prudent” approach, has generated some optimism. However, the lack of detailed plans for a “proactive fiscal policy” leaves much to be desired. Previous efforts, such as interest rate cuts and asset purchase programs, have not been effective in boosting economic growth.
China’s economic problems are deep-rooted and require more substantial actions. The delays in government intervention following failures in the property development sector have had widespread repercussions, impacting local governments, consumer spending, and overall economic growth. Additionally, China faces challenges in the form of trade tensions with other countries, further complicating its economic outlook.
Given the severity of the situation, it is clear that China needs to take more decisive and bold measures to address its economic woes. The current focus on monetary policy may not be sufficient, as interest rate cuts have not kept pace with inflation, leading to a tightening rather than easing of monetary conditions. More aggressive steps will be necessary to stimulate the economy and support sustainable growth in China.
It is highly unlikely to happen considering the concept of “moderate” ease.
Even if the PBOC and its leaders in Zhongnanhai were to take such bold actions, it is doubtful that it would be enough to revive China’s economy. Monetary easing alone cannot address the growing global hostility towards Chinese trade. The root of China’s economic issues lies in the lack of confidence among households and businesses regarding the future, rather than the cost of borrowing.
Building confidence will require significant policy changes from Beijing and a considerable amount of time, even with the most innovative strategies in place. The current proposals from the Politburo do not seem to offer a viable solution. While they may provide some hope, they do not inspire enthusiasm.
Opinions expressed in this article are those of the author and do not necessarily represent the views of The Epoch Times.
