As China's latest economic stimulus measures are yielding positive results and have sparked optimism in the market, more bold steps are still needed to tackle underlying economic challenges and support sustainable growth, experts told the China Global Television Network (CGTN) on Saturday.
The three-day Annual Conference of Financial Street Forum 2024 concluded on Sunday in Beijing, bringing together heavyweight guests from home and abroad to discuss financial opening-up and cooperation as well as economic development. The event comes after China unveiled a slew of stimulus measures aimed at boosting economic growth and bolstering the property market. On the sidelines of the forum, CGTN talked with some experts about the effectiveness of these measures.
Spearheaded by the People's Bank of China, the central bank, the package includes wide-ranging monetary, property, and share market policies that seeks to stabilize the economy and restore investors' confidence.
China's central bank has rolled out a rather "aggressive monetary policy," with reductions in both the policy interest rates and the reserve requirement ratio (RRR). The RRR is cut by 0.5 percentage points, and that equals to inject around one trillion yuan (about 137 billion U.S. dollars) in liquidity into the financial system.
"Well, I think that in so far as they affect markets, I think they've been positive, and the stock market has responded well, so investors think that they're on the right track," said Howard Davies, former chairman of the UK Financial Services Authority.
Meanwhile, the central bank, for the first time, has introduced two new liquidity tools to encourage financial institutions and listed companies to increase their stock holdings, including a swap scheme with the initial scale of 500 billion yuan (about 71 billion U.S. dollars) allowing firms to access cash to buy stocks.
Sun Guodong, deputy director at the Development and Governance Division of the Chinese University of Hong Kong (Shenzhen), emphasized the role of the stock market in nurturing innovative enterprises that will help local governments enhance revenues amid changing economic structures.
"I believe after the Third Plenary Session of the 20th CPC Central Committee, the economic structure of China has changed. Technology innovation has become one of another key drives of the economy. Local governments need to cultivate more innovative enterprises and listed companies to increase revenue. And many science and technology innovation enterprises need drives from the stock market," said Sun.
In terms of the property market, most of commercial banks are cutting mortgage rates for existing home loans, while the government plans to expand its "whitelist" of approved real estate projects. Currently a total of 2.23 trillion yuan (about 314 billion U.S. dollars) have already been approved in loans to white-listed developers, and that figure will almost double to four trillion yuan by the end of this year, according to the Ministry of Housing and Urban-Rural Development.
"To cut mortgage rates on existing housing loans will definitely help ease the repayment pressure on homeowners and make the real estate market more sustainable. However, in many cities, we still have a lot of unsold housing inventory," said Tao Ran, director of the Development and Governance Division under Chinese University of Hong Kong (Shenzhen).
Tao also called for more policy tools to adjust the economic structure and increase people's income and deal with the excess housing inventory, such as pushing forward shantytown renovations in major cities.
"I think we need to take more unconventional measures to at least address the large housing inventory in the cities where the population flows in. This could help to stabilize the housing prices and even enable them to grow a little bit. For example, to draw lessons from the previous round of shantytown renovations, which primarily took place in cities experiencing population outflows. Now, we need to focus on cities that are experiencing population inflows," said Tao.
Despite the initial outcomes, concerns about the long-term effects of the stimulus measures still remain. To maintain long-term growth, the country needs to make more efforts to tackle consumer spending and structural challenges such as an aging population, property market fragility, and trade frictions, according to experts.
Economic stimulus measures yielding positive results; more efforts needed: experts
