CONFIDENCE “CRISIS”
Observers were closely watching Friday’s data release – which will also include readings covering the final quarter of last year – for signs those measures succeeded in reviving activity.
“With a package of incremental policies being timely rolled out … social confidence was effectively bolstered and the economy recovered remarkably,” the NBS said.
China’s central bank has indicated in recent weeks that 2025 will see it implement further rate cuts, part of a key shift characterised by a “moderately loose” monetary policy stance.
But analysts warn that more efforts are needed to boost domestic consumption as the outlook for Chinese exports becomes more uncertain.
“Monetary policy support alone is unlikely to right the economy,” Harry Murphy Cruise of Moody’s Analytics told AFP.
“China is suffering from a crisis of confidence, not one of credit; families and firms do not have the confidence in the economy to warrant borrowing, regardless of how cheap it is to do so,” he wrote.
“To that end, fiscal supports are needed to grease the economy’s wheels.”
One component of Beijing’s newest policy toolbox is a subsidy scheme – now expanded to include more household items including rice cookers and microwave ovens – that it hopes will encourage spending.
But recent data shows that government efforts have not yet achieved a full rebound in consumer activity.
China narrowly avoided a slip into deflation in December, statistics authorities said last week, with prices rising at their slowest pace in nine months.
China emerged from a four-month period of deflation in February, a month after suffering the sharpest fall in prices for 14 years.
Deflation can pose a threat to the broader economy as consumers tend to postpone purchases under such conditions, hoping for further reductions.
https://www.channelnewsasia.com/east-asia/china-economic-growth-among-slowest-decades-4864746
