Chinese Economist: "Over 765 Trillion Won Needed for Economic Stimulus"

Former Monetary Policy Committee Member: "Must Surpass the Scale of the 2008 Global Financial Crisis"

An economist who served as a monetary policy committee member of the People's Bank of China argued that a stimulus package exceeding 4 trillion yuan (approximately 765 trillion won) is necessary to boost China's economy. The 4 trillion yuan was the amount China injected during the 2008 global financial crisis.

Yu Yongding, a member of the Chinese Academy of Social Sciences, said in an interview reported by the Hong Kong South China Morning Post (SCMP) on the 16th, "Since China's current economic scale surpasses that of the past, the new stimulus package must exceed the 2008 scale," adding, "It is a golden opportunity to invigorate the national economy at once." Yu also emphasized that for economic stimulus, it is ideal to quickly present quantified stimulus measures and detailed plans, stating, "Policy announcements should not be delayed."

The Chinese Ministry of Finance announced on the 12th that it plans to significantly increase the issuance of government bonds to stimulate the economy but did not disclose the issuance scale. When the National Development and Reform Commission, which oversees China's economic planning, did not announce specific stimulus measures on the 8th, the Chinese stock market also experienced a sharp decline.

Regarding some experts' claims that special government bonds should be issued over the next one to two years to implement a stimulus package of at least 10 trillion yuan (approximately 1910 trillion won), Yu expressed agreement, saying it is "worth considering."

After concerns were raised that the stimulus measures implemented after the financial crisis caused new side effects such as overproduction, local government debt, excessive reliance on the real estate market, and threats to the financial system, SCMP pointed out that the Chinese government has shown hesitation in implementing large-scale stimulus packages.

Yu dismissed concerns about a fiscal crisis combined with a surge in leverage (borrowing) and inflation, citing China's high savings rate and overseas assets and foreign exchange reserves, each amounting to 3 trillion dollars (approximately 4000 trillion won).

He stressed, "China is far from the point where it needs to worry about fiscal sustainability," and added, "What China should worry about is the continuous decline in economic growth rates."

Yu is one of the leading advocates of stimulus measures and recently expressed at a forum earlier this month that additional fiscal policies should be introduced to complement the ongoing monetary policies.