"The Miracle of Double-Digit Growth in China Has Ended... Expansionary Fiscal Policy Needed"

Wi Yongding, Member of the Academy of Social Sciences and President of the China World Economics Society

A prominent Chinese economist stated that China's double-digit growth has ended and that the government needs to implement more expansionary fiscal and monetary policies.

Yu Yongding, a member of the Chinese Academy of Social Sciences, a think tank directly under the State Council of China, said at the 'Caixin Forum' hosted by the Chinese economic media Caixin on the 9th, "The miracle of China's double-digit economic growth that lasted for 30 years has essentially ended," but added, "That does not mean China cannot maintain a relatively high economic growth rate." Yu has also served as the president of the Chinese Society of World Economists since 2000.

Member Wei Yongding of the Chinese Academy of Social Sciences, a think tank directly under the State Council of China (Photo by Baidu)

He emphasized, "The problem facing the Chinese economy is a lack of aggregate demand," and said, "An expansionary monetary policy should be adopted to promote consumption, investment, and exports." He continued, "The decline in China's economic growth rate is not inevitable and could be higher than 6%," stressing, "The key lies in macroeconomic policy." China's gross domestic product (GDP) growth rates were 4.5% in the first quarter, 6.3% in the second quarter, and 4.9% in the third quarter.

Yu introduced the expansionary policies in more detail, explaining, "According to the central government's proposition that consumption is a function of income, stable and sustained consumption growth depends on income increases and improved expectations." He said, "Investment in manufacturing mainly depends on the development of the manufacturing sector itself and can be supported by industrial policies," adding, "Infrastructure investment remains the focus of stimulus measures, and the central government should increase investment in new infrastructure, livelihood projects, and other infrastructure projects."

He also noted that although the Chinese economy faces difficulties such as bankruptcies of real estate developers and local government debt, "there is still considerable room for policy maneuvering," pointing out that "the Chinese government's debt ratio is only 50% of GDP, which is lower compared to Italy, the United States, Spain, and Singapore." He forecasted, "If we implement expansionary fiscal policies and promote economic growth through infrastructure investment, we can also contribute to global growth."

At the forum, Zhang Tao, the Asia-Pacific regional representative of the Bank for International Settlements (BIS), also attended and emphasized that the policies of central banks worldwide to control global inflation are crucial at this time. He said, "Facing global inflation and population decline in major Asian countries, cautious fiscal and macroeconomic policies are needed in each country," stressing the need for international cooperation. He added, "The world is becoming increasingly complex, facing various challenges such as population aging and geopolitical issues," and said, "Since these are not problems of a single country or region, the entire world must unite to respond."