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China Announces Wide-Ranging “Special Action Plan” to Boost Consumer Spending

China’s plan will fail for the same reason that its previous efforts failed.

Their road map for economic stimulus included larger pensions, better medical benefits and higher wages — measures that could bolster China’s lagging domestic consumption. But it assigned many of these tasks to the country’s local governments, a large number of which are struggling under enormous debts and plummeting revenues from a decline in the sale of state land.

Part of the document released on Sunday seemed aimed at reassuring the Chinese public that their investments were safe, so that they would start spending money again. The authorities promised to undertake “multiple measures to stabilize the stock market” and to underpin the real estate market, which has been marred by falling property prices.

A housing market crash in the past three years has wiped out much of the savings of China’s middle class. Chinese households have responded by curtailing their spending on hotels, restaurants and other services and putting their savings into bank accounts, despite earning very little interest.

Data released by China’s National Bureau of Statistics on Monday confirmed the trend, showing that consumer spending remains weak while manufacturing, which produces goods in large part for export to foreign markets, stayed strong.

The “Special Action Plan to Boost Consumption” was issued in the name of two of the highest organs of power in China: the General Office of the cabinet and the General Office of the Central Committee of the Communist Party. The unusual step showed that Beijing’s leaders want to signal that they are serious about addressing lackluster domestic spending.

https://mishtalk.com/economics/china-announces-wide-ranging-special-action-plan-to-boost-consumer-spending/

China needs to write of bad debts in housing, write off bad debts in State Owned Enterprises (SOEs), and stop ridiculous export subsides that benefit US consumers at the expense of Chinese consumers.

But the political class does not want to take a hit in SOEs, and consumers are angry enough over housing already.

So China is doing the only thing it knows how to do, boost exports and make announcements that do little.

https://fasteddynz.substack.com/p/does-temu-signal-imminent-systemic/

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Fast Eddy's avatar

Mike is unhinging... he is watching Art Berman and others blatantly lie (cuz they have been told to lie cuz the situation is very grim).... and he cannot understand why they would lie... https://www.oilystuff.com/forumstuff/forum-stuff/decline-baby-decline

As I have informed him... imagine how the barnyard animals would react if they were told The Truth.

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