A former Chinese finance minister has said it would be practical for the country to consider further deficit spending in order to support small businesses.
Some local governments have issued consumption vouchers in attempt to stimulate economic activity, but these have done little to spur growth due to a drop in revenue at all levels, said Lou Jiwei, speaking to the Caixin Summer Summit in Beijing.
With the country still recovering from the economic fallout of Covid-19, China has announced a number of new economic support measures in recent weeks. Analysts still believe the nation will fall short of its 5.5% economic growth target for 2022 though.
Despite pledging a considerable amount of spending already Lou, who served as China’s Minister of Finance between 2013 and 2016, is convinced there is still room for further spending if necessary.
“When necessary, we can increase the central and local budget deficits,” he said.
Much of the support for the Chinese economy this year has come from fiscal stimulus to counter the impact from the Covid pandemic. China’s economy took a particularly hard hit due to the strict measures put in place by Beijing to combat the virus, with lockdowns in the nation continuing long after other countries had deemed them no longer necessary.