China’s Economy Needs a Stimulus Package
The latest data suggest that without significant government intervention, China’s economy will struggle to reach this year’s official 5% growth target. To reinvigorate its slowing economy and fuel growth in 2024 and beyond, China should take a page from its 2009 playbook and pursue large-scale monetary and fiscal expansion.
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BEIJING – In January, shortly before the Chinese government set its annual growth target at 5%, I estimated that if net exports stopped declining, achieving 5% growth would require boosting investment growth to 5.3%, given a slowdown in consumption this year. To offset the expected sharp decline in real-estate investment, my calculations suggested that infrastructure investment would need to “increase significantly” – a goal that seemed within reach at the time.