China has cut rates, now it needs a fiscal policy package: former central bank adviser

Outspoken economist Yu Yongding calls for more infrastructure investment ‘or we won’t meet this year’s 5 per cent growth target’

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All eyes are on whether Beijing will roll out more fiscal support after markets rallied following the central bank’s aggressive rate cuts. Photo: Bloomberg

Published: 10:00pm, 29 Sep 2024Updated: 10:27am, 30 Sep 2024

China urgently needs a fiscal policy package to fully boost market confidence following stimulus measures announced last week, a former central bank adviser has urged.

“I think the ball is now in the Ministry of Finance’s court. We hope to see new actions from them,” outspoken economist Yu Yongding told a forum in Beijing on Saturday.

The call from the former policy adviser to the People’s Bank of China comes as all eyes are on whether Beijing will roll out more fiscal support after markets rallied following the central bank’s aggressive rate cuts on Tuesday.

The stimulus package has received “positive feedback”, but to enhance its effectiveness, greater fiscal policies are necessary, Yu told the Tsinghua PBCSF Chief Economists Forum.

With only three months left of the year, achieving the government’s “around 5 per cent” growth target for 2024 would be challenging, said Yu, who now serves as academic adviser for the Beijing-backed think tank China Finance 40 Forum.

Economists at the Beijing forum largely agreed on the serious challenges ahead and the need for more expansionary fiscal and monetary policies.