How many times have we heard this? A key adviser to China's central bank has called for a "stronger fiscal push" to repair the damaged finances of households and corporations, warning that recent signs of economic resilience are concealing the true impact of the U.S. trade war.
Speaking at the Bund Summit in Shanghai, Huang Yiping, a member of the PBOC’s monetary policy committee, argued that while booming exports supported third-quarter growth, the domestic economy remains fragile. He pointed to weak inflation, sluggish private investment, and high unemployment as evidence of weak confidence amid tariff uncertainty.
- "The government, including the central bank, needs to take major steps to repair the balance sheets of households, enterprises, local governments, and possibly financial institutions"
- specifically urged the government to stabilize the property market to restore consumer confidence
- also emphasized that stronger household incomes are essential for lasting consumption growth, cautioning that subsidies offer only "short-term relief" and have already contributed to industrial overcapacity.
Huang was cautious about the central bank's own ability to act, noting there is "limited room for aggressive easing," thereby placing the burden of stimulus firmly on fiscal policy.
His comments, which cast doubt on China’s ability to withstand trade pressures without broader government support, were echoed by top officials at this week's Central Committee meeting. The committee reaffirmed the need to stabilize employment, enterprises, markets, and overall economic expectations.
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This report signals that further policy support for the Chinese economy will likely come from fiscal (government) channels, not monetary (PBOC) ones.
If so, this shifts the focus onto infrastructure and domestic consumption, which could support Chinese equities (CSI 300) and industrial commodities. However, the downbeat assessment of domestic confidence and the admission of "limited room" for rate cuts will likely cap optimism and put a floor under Chinese bond yields, as the market digests that the PBOC cannot ride to the rescue with aggressive easing.
