中文
By Matteo Giovannini
On October 12, China's Finance Ministry held a highly anticipated press conference to announce a sweeping fiscal package aimed at stabilizing the economy, which has been facing persistent challenges. After years of navigating global economic turbulence and internal structural issues, including a property market downturn and weak domestic demand, Beijing is implementing a series of fiscal measures designed to support growth and ensure long-term economic stability.
At the heart of these proposals is the government's plan to issue additional bonds to fund large-scale infrastructure projects, alongside efforts to prop up the struggling real estate sector and provide targeted subsidies to lower-income households. These measures highlight China's shift toward prioritizing domestic consumption and equity while attempting to counteract the ongoing slowdown in growth. The approach demonstrates both pragmatism and ambition, signaling a willingness to expand public debt to achieve stability while still remaining focused on income redistribution and long-term development.
The bond issuance plan stands out as one of the key measures in this package. Historically, infrastructure spending has been a cornerstone of China's economic model, and this move is intended to revitalize the investment pipeline. Through these new bonds, the government will finance a series of public works projects, from transportation to digital infrastructure and renewable energy. In the short term, this approach will stimulate demand and generate employment, both of which are sorely needed in a post-pandemic economy still reeling from the effects of global trade disruptions and sluggish domestic consumption.
Alongside, the Finance Ministry is introducing subsidies targeting low-income households. These subsidies are designed to address income inequality and stimulate domestic consumption, a critical factor in China's evolving economic strategy. For decades, China's growth was driven by exports and heavy industry, but this model is no longer sustainable in an economy increasingly defined by its large and diverse middle-income group. The government's focus on "common prosperity" reflects a broader shift in economic thinking, one that prioritizes social stability and the equitable distribution of wealth over sheer output.
By targeting subsidies for lower-income households, the government is hoping to boost consumption from the bottom up, creating a more resilient and consumption-driven economy. This is a necessary step for China's long-term transition toward high-quality growth, as it reflects a shift away from reliance on traditional drivers like real estate and manufacturing. If successful, this could mark a turning point for the economy, ensuring that growth is more inclusive and sustainable.
The real estate sector, however, remains a challenge. The property market has long been a pillar of China's economic strength, contributing significantly to GDP growth and government revenues. However, recent years have seen a sharp downturn in the sector, with rising debt levels and falling property prices posing major risks. In response, the ministry announced plans to issue local government bonds specifically for supporting the real estate market. This move aims to ensure that local governments have the financial means to manage property-related risks, such as unfinished projects and unsold properties.
Finally, the recapitalization of state-owned banks, announced as part of the fiscal package, is aimed at safeguarding financial stability. These banks play an essential role in funding public projects and supporting businesses, especially in sectors aligned with government priorities such as technology and green development. Injecting capital into these institutions will help ensure they can continue lending, which is critical to maintaining liquidity in the economy.
The combination of these fiscal measures demonstrates China's commitment to maintaining stability in the face of both domestic and global challenges. Yet, the implications extend far beyond China's borders. As the world's second largest economy, China's economic policies have a global impact. The increased government spending and efforts to stimulate domestic consumption could lead to higher demand for imports, benefiting global supply chains and trade partners. Furthermore, by stabilizing the property market, China is reducing the risk of a potential financial contagion in global markets.
In conclusion, the announced fiscal measures represent a bold and necessary step toward addressing the country's current economic challenges. The success of these policies will depend on careful implementation and the ability to balance short-term stimulus with long-term fiscal discipline. The world will be watching closely as China navigates this critical moment in its economic trajectory.
Matteo Giovannini, a special commentator on current affairs for CGTN, is a finance professional at the Industrial and Commercial Bank of China and a non-resident associate fellow at the Center for China and Globalization.
