China’s economic stimulus gathers pace with consumption and property moves, but more needed for drastic reversal
- Policies to lower existing mortgage rates and tax cuts for families with children and elderly relatives are some of the most substantial taken
- And while they have fuelled expectations for further moves, analysts have warned that more would be needed as the ‘golden times’ for property sales has ended
China’s economic stimulus has begun to gather pace to deliver much needed growth momentum and defuse the financing risk in the property sector and at local government level, with the latest set of support measures introduced to lift household consumption, rescue the property market and shore up the yuan.
Thursday’s measures have also fuelled expectations that Beijing’s policymakers will further open their toolbox, as some analysts have warned they would not be enough to turn around the sluggish economic recovery, as well as weak consumer sentiment and investor confidence.
The mortgage rate cut is expected to reduce household expenditure by billions of yuan a year.
[These policies] mean the government is making changes one layer at a time instead of attempting to introduce a one-off fix
“It acts as a cumulative boost to market confidence, but a drastic reversal of the market’s low expectations will require a sustained new stimulus to be given in the future,” said Zhao Xijun, a finance professor at Renmin University.
“[These policies] mean the government is making changes one layer at a time instead of attempting to introduce a one-off fix.”