Goldman Sachs Exchanges Will China’s policy stimulus be enough?
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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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China's Recent Economic Performance
- China's 2023 growth disappointed, reaching only 5.2% after a weak 3% in 2022.
- While exports surprised positively in 2024, domestic demand weakened, leading to policy stimulus.
Local Government Debt Swap
- The most significant policy change is the local government debt swap plan, a ¥10 trillion package.
- This addresses the urgent risk of local governments prioritizing debt repayment over essential services.
New Stimulus Measures
- New measures target the equity market, possibly aiming for wealth effects or countering deflation.
- The government recognizes that property and infrastructure investments are no longer primary stimulus drivers.