Under the circumstances, some are perplexed as to why China has not implemented a large-scale economic stimulus program like it did after the 2008 global financial crisis. Speculation suggests that China’s leaders still have confidence in the resilience of the economy. In truth, the Chinese economy is not struggling as much as foreign media reports suggest, and there are tentative signs of stabilization.
There are indicators that China may unleash a “big bazooka” to stimulate the economy. China’s official manufacturing purchasing managers’ index rose in August, and there is a narrowing of deflation and an increase in consumer prices. Even the property sector, which was a weak point in the economy, is showing signs of recovery. Potential buyers are returning to showrooms following the government’s decision to lift mortgage restrictions and cut interest rates.
Despite lackluster economic growth and concerns about debt risks, China has several tools at its disposal to revive the economy. Radical thinking and a departure from the current approach are needed. The private sector, which has been integral to China’s economic expansion, has faced numerous challenges, such as lockdowns and crackdowns on alleged excesses. However, the government has recently released policy measures to support the private sector and boost confidence.
Restoring confidence will not be easy, but there are simpler and more effective ways to increase confidence for private business owners, consumers, and foreign investors. The government should provide a level playing field and legal protection for private businesses instead of overseeing them closely. Releasing detained business owners and reevaluating the anti-corruption campaign can also boost confidence. Doubling the leasehold terms for residential properties and streamlining the bureaucracy are additional measures that can be taken to promote growth and confidence.
In conclusion, China has the means to revitalize its economy, but it requires bold and innovative thinking. Confidence in the private sector, consumers, and investors must be restored through various measures. By implementing these changes, China can overcome its economic challenges and continue its path of growth.