China's economy needs a boost, but it's struggling because people don't believe home prices will increase. As a result, people aren't borrowing money to buy homes or invest in businesses. The government is hesitant to provide more stimulus because they view their previous program as a failure that led to overheating and speculation. To avoid a worse economic downturn, China needs to convince people that home prices will rise and encourage borrowing. This will help jump-start activity and drive down risk.
China's central bank and economic planning agency have indicated support for economic growth. The central bank suggests easing monetary policy to increase liquidity. The planning agency advocates for coordinated economic policies to address challenges. Fiscal prudence remains a focus, aiming for a 3% deficit and approximately 5% growth rate. Officials emphasize supporting consumer spending, stabilizing prices, and pursuing innovation and investment-led growth.
