China’s economy needs US$1.4 trillion injection for recovery, top voice on reform says

Ultra-long-term special bonds to fund stimulus among solutions from ex-government adviser as China battles weak demand and property slump

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Weak domestic demand has hampered China’s efforts to meet its annual economic growth target of “around 5 per cent”. Photo: Bloomberg

Published: 9:08pm, 21 Sep 2024

China should launch a stimulus package of at least 10 trillion yuan (US$1.42 trillion) in a year or two to revive economic momentum, a former top government adviser has said.

The call from Liu Shijin, former deputy director of the State Council’s Development Research Centre, comes as China grapples with weakening domestic demand and a prolonged property slump.

The suggested stimulus should be primarily funded by ultra-long-term special bonds and should focus on addressing gaps in basic public services, Liu told the China Macroeconomy Forum hosted by Beijing’s Renmin University on Saturday.

“[The stimulus plan] should closely coordinate with demand-side structural reforms, to create a combined effect of boosting consumption, stabilising growth, and mitigating risks. This includes a stimulus scale of 10 trillion yuan,” he said.

“A key area is to significantly improve basic public services for new citizens, particularly rural migrant workers moving to cities, in areas like affordable housing, education, healthcare, social security and elderly care.”

In the short term, Liu suggested that the government buy unsold flats for conversion into preferential housing for rural migrant workers.