Analysts at major international banks cut their 2023 economic growth forecasts after May data showed weak demand in China and from abroad, reinforcing arguments for the need for more stimulus measures.
“It is better to take action sooner rather than later,” said Ning Jiezhi, deputy head of the Economic Committee of the Chinese People’s Political Consultative Conference.
He added that the Chinese economy is facing severe downward pressure, and its recovery is unstable and unbalanced.
Ning said macroeconomic measures “should not be limited” to prevent “continuous economic contraction” amid a global slowdown.
China’s cabinet met this month to discuss measures to boost economic growth, vowing to implement policies in a timely manner and take more robust measures in response to changes in the economic situation.
And China cut the benchmark interest rates on loans on Tuesday, in the first cut of its kind in ten months, and also cut the benchmark interest rates on loans for five years, by ten basis points, which came less than expected.
Analysts say the Chinese central bank is likely to cut interest rates on lending further, but the reluctance of private companies and households to borrow means that continuing the policy of monetary easing may harm banks that are already under pressure.
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