Finance Spotlight | Experts: 'More-than-expected policies' should be launched to stimulate domestic consumption

According to the data released by the mainland earlier, the GDP in the first half of the year grew by 5% year-on-year, which is in line with the overall forecast. However, from the breakdown of the data, the economic growth in the first half of the year is mainly due to the export of more than expected performance, while the domestic demand has not seen a significant recovery, and even slowed down in some areas.

Qu Hongbin, Vice President of the China Chief Economist Forum, said in an online interview with DotDotNews that the thing especially worth paying attention to is that the total retail sales of consumer goods year-on-year growth has fallen to a rare low of 2%, which is a rare low, so it can be seen that the problem of insufficient consumer demand is becoming increasingly prominent.

After the Third Plenary Session, the mainland central bank announced on the 22nd that it would lower the 1-year and 5-year LPRs by 10 basis points. Qu noted that the current arrangement of interest rate cuts is still a toothpaste-squeezing and fragmented policy, which can hardly have a significant effect on boosting the economy. At least so far, a series of measures have been launched to expand domestic demand but have not achieved the expected results.

Qu emphasized that under the influence of external uncertainties such as geopolitical risks, Western trade protectionism and the U.S. election, it is even more important to promote domestic demand. In order to achieve the goal of GDP growth of around 5% for the whole year, the government needs to strengthen further the strength of measures to stimulate consumption. For example, in the short term, reference can be made to Hong Kong's previous experience in issuing consumption vouchers to directly increase people's income, or subsidies can be provided to low and middle-income groups in a targeted manner. In the long term, the social welfare of 200 million rural workers should be equalized to people living in the city, and at the same time, an increase in infrastructure, education and health care and other areas of effective investment and expenditure can stimulate domestic demand, drive business orders and employment growth.

"There is still room for fiscal policy... our fiscal deficit is still around 3%, and it is feasible to expand it to 6% or even higher at this time," Qu added.