Editorial | Trade-offs needed to boost post-pandemic recovery in China
- Making the right policy adjustments to meet the challenge of structural changes in the economy will matter more than boosting short-term consumption
The jury is still out on China’s economic outlook, but an increasing number of people now tend towards the more pessimistic view. Officials seem to think the economy is undergoing a soft patch after the short post-pandemic burst petered out, but that growth targets can still be met by the end of the year.
Even so, the National Development and Reform Commission (NDRC), the country’s top economic planner, has rolled out new measures to help boost consumer confidence.
It is more piecemeal than a shock-and-awe stimulus. That may indicate a cautious approach to avoid adding to systemic risks. It may also be a sign of confidence that the economic recovery is still on track, albeit at a slower pace than many had hoped.
But more observers are no longer so easily convinced. There are signs of an economic slowdown. Officials have yet to come to grips with a shaky property sector, sluggish consumer spending and rising local debt.
A lower-than-expected 6.3 per cent growth in the second quarter, from a low base a year before, was underwhelming. The July data on manufacturing and services was weak.
The 20 measures the NDRC has rolled out aim to address precisely those issues, especially in boosting consumption.