Goldman Sachs Exchanges
Will China’s policy stimulus be enough?
Dec 16, 2024
Hui Shan, Chief China economist at Goldman Sachs, and Michael Pettis, Professor at Peking University, delve into China's economic landscape. They discuss the nuances of China's policy stimulus and its potential effectiveness against both domestic challenges and external pressures, such as U.S. trade policies. The conversation uncovers shifts towards consumption over infrastructure, critiques of manufacturing subsidies, and the impact of political dynamics, including potential tariffs from the U.S. The experts evaluate if these measures can truly revitalize China's sluggish GDP growth.
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Quick takeaways
- China's policy stimulus addresses immediate economic issues, yet fails to resolve deeper structural problems, raising concerns about long-term sustainability.
- The shift from reliance on property investment to promoting household consumption indicates an evolving economic strategy, though execution challenges persist.
Deep dives
China's Economic Challenges and Stimulus Measures
China is facing significant economic challenges, including a disappointing growth rate of 5.2% in 2023, despite expectations of a strong rebound following its reopening. Policymakers have responded with a range of stimulus measures, primarily focusing on fiscal support and an expansion of demand-side policies. However, these stimulus efforts are viewed as short-term solutions, as the deeper underlying issues within the economy remain unresolved. Notably, the delayed response from policymakers in announcing the stimulus packages has raised concerns about their effectiveness in truly addressing the economic pain points.
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