China's restrained stimulus reflects govt debt concerns: Report
New Delhi, May 23
China's restrained approach to uplift its slowing economy "reflects concerns over local government debt burdens and the decreasing effectiveness of large-scale stimulus measures," a report has said.
Hence, the report from Geopolitical Futures said expectations for China's medium-term growth outlook have become more cautious, and with a rapid rebound seeming increasingly unlikely.
China's economy will remain difficult to keep in balance due to pressures from weak domestic demand, a prolonged property downturn and geopolitical risks.
The report cited data that consumer sentiment and private-sector investment remain subdued even amidst and targeted support for strategic industries.
"Persistent deflationary pressures and high youth unemployment also signal that households and businesses are still cautious about spending and expansion," the report said.
Even as China's export sector remains resilient, offsetting part of domestic consumption weakness and downturn in property markets, escalating tensions in the Middle East could complicate China's recovery as trade uncertainty and input costs rise.
Meanwhile, Beijing appears reluctant to launch another large-scale stimulus campaign similar to earlier versions during slowdowns, and authorities prefer incremental policy support, the report noted.
The Chinese administration also considers "selective infrastructure spending and targeted credit measures aimed at stabilising growth without significantly increasing debt risks."
China's official headline growth figures are fake and the country's economy is headed for a major danger from its mounting bad debt and a rapidly ageing population, another recent report said.
It cited US think tank Rhodium Group estimates that true growth of the Chinese economy is closer to 2.5-3 per cent rather than the Chinese government's real GDP growth figures for 2025 at 5 per cent.
"There are two major obstacles standing in the way of China's economic future: massive amounts of bad debt born from a bursting bubble, and an inverted population pyramid from low birthrates and an aging population," the report said.
— IANS
Reader Comments
The report about China's true growth being 2.5-3% is a wake-up call. Governments everywhere have to be transparent. Our own economic data needs to be credible if we want foreign investment to keep flowing.
China's property downturn and youth unemployment—sounds familiar, no? We have similar issues here. But at least our demographic dividend is still strong. That's our biggest advantage vs. China's aging population. Let's use it wisely.
Selective infrastructure spending and targeted credit measures—that's exactly what we should do too. Not the old freebie culture. The article highlights that large-scale stimulus loses effectiveness. Hard lesson for many developing economies.
Middle East tensions affecting China's trade—good reminder how interconnected we all are. For India, this means diversifying supply chains is not just strategy, it's survival. Make in India but with global resilience in mind.
Geopolitical Futures and Rhodium Group are reliable sources. The bad debt and aging population points are serious. India must avoid the twin traps: easy credit fueling real estate bubbles and neglecting our own demographic transition. Time to reform pensions and healthcare.
The "official growth figures are fake" part is
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.