Stimulus Alone Won’t Solve China’s Problems
To revive growth, the government needs to address the deeper-rooted issues holding back businesses and consumers.
Consumers have pulled back.
Photograph: Bloomberg
Among the many questions US Treasury Secretary Janet Yellen will have for China’s leaders when she visits Beijing this week is what they plan to do about the country’s faltering recovery, which has cast a shadow over markets and the global economy. More short-term stimulus might be in order — but it won’t solve the deeper-rooted issues that are holding back growth.
A burst of spending at the beginning of the year, after the government lifted draconian Covid-19 restrictions, spurred hopes that China might bounce back strongly and deliver a much-needed boost to the global economy in 2023. Consumers have pulled back instead, spooked by a slumping property market and pandemic-battered finances. Businesses, also hit hard by Covid lockdowns, have followed suit: Private investment is down compared with 2022.