1/5 This is the kind of thing China should do more of to revive...
Michael Pettis@michaelxpettis
67 views
May 08, 2024
~1 min read
Advertisement
1
1/5
This is the kind of thing China should do more of to revive domestic demand. According to Bloomberg, "China will hand out billions of yuan to help cities renovate run-down public buildings and upgrade infrastructure."
bloomberg.com/news/articles/… via @economics
This is the kind of thing China should do more of to revive domestic demand. According to Bloomberg, "China will hand out billions of yuan to help cities renovate run-down public buildings and upgrade infrastructure."
bloomberg.com/news/articles/… via @economics
2
2/5
"The money will go to improve pipelines, power networks or drainage systems, and to overhaul public buildings and ensure they’re accessible for children and older people."
"Fifteen qualified cities can get as much as 1.2 billion yuan each over three years."
"The money will go to improve pipelines, power networks or drainage systems, and to overhaul public buildings and ensure they’re accessible for children and older people."
"Fifteen qualified cities can get as much as 1.2 billion yuan each over three years."
3
3/5
To the extent that this represents a real transfer to households, it is a sustainable form of productive investment, unlike investment in more apartments, more infrastructure, or more manufacturing capacity.
The problem is that even as a pilot program it is extremely small.
To the extent that this represents a real transfer to households, it is a sustainable form of productive investment, unlike investment in more apartments, more infrastructure, or more manufacturing capacity.
The problem is that even as a pilot program it is extremely small.
4
4/5
If all the funding is taken up, it will represent less than half of a single basis point of GDP. Even multiplying the program by 100 will generate far less demand than fiscal spending on the supply side of the economy.
If all the funding is taken up, it will represent less than half of a single basis point of GDP. Even multiplying the program by 100 will generate far less demand than fiscal spending on the supply side of the economy.
5
5/5
In March I argued that the only healthy way for China to hit the 5% GDP growth target, without a further surge in overinvestment in unnecessary projects, required large "welfare" transfers to households. This is the right kind of transfer, but it's too small to matter.
In March I argued that the only healthy way for China to hit the 5% GDP growth target, without a further surge in overinvestment in unnecessary projects, required large "welfare" transfers to households. This is the right kind of transfer, but it's too small to matter.