China is set to unleash fresh fiscal stimulus to shore up its economic recovery, drawing on a well-used playbook that relies heavily on debt and state spending but falls short on the deeper reforms called for by a growing number of analysts.
Some government advisers are recommending China lifts its 2024 budget deficit target beyond the 3% of gross domestic product set for this year, which would allow Beijing to issue more bonds to revive the economy, policy insiders and economists have told Reuters.
However, near-term needs have largely overshadowed those calls for more politically ambitious reforms and instead centre on authorities stepping up fiscal and monetary support. "Fiscal policy should still play the leading role next year," said Xu Hongcai, deputy director of the economic policy commission at the state-backed China Association of Policy Science.
"There is still room to cut interest rates and reserve requirement ratios but there is a question of sustainability," said Guan Tao, global chief economist at BOC International and a former official at the State Administration of Foreign Exchange .