A report by South China Morning Post quotes a Chinese think tank as saying that Beijing will not introduce “giant stimulus program” to counter growing downside risks from the US trade war and structural issues and would rely on tax cuts and budget management report.
Liu Shangxi, head of the Chinese Academy of Fiscal Sciences, an important think tank under the Ministry of Finance that advises Beijing on fiscal policy believes Beijing will avoid introducing big stimulus because the 2008 package helped lead to inefficiencies and overcapacity in the manufacturing sector.
“We will not introduce another giant economic stimulus program for the problem we are faced with now – consumers are asking for greener, healthier and better goods but cannot find them in the market – it is different from the problems in 2008.”
“We would mainly use tax and fee reduction, at an estimated volume of 2 trillion yuan, to offset both international and domestic risks and uncertainties.”
“And we have to reform the existing budget management system so as to push people to perform better with less spending.”