CCP Uses $41 Billion from Long-Term Bonds to Boost Consumer Spending
Experts suggest that the direct allocation of 300 billion yuan (about $41.4 billion) in ultra-long-term treasury bonds by Beijing to local governments for equipment upgrades and consumer goods trade-in projects will have a limited effect.
China’s ruling Chinese Communist Party’s National Development and Reform Commission (NDRC) and Ministry of Finance announced this measure to support large-scale equipment upgrades and trade-ins of old consumer goods.
Analysts believe that due to foreign capital withdrawal, production overcapacity, sluggish domestic demand, and decreased consumer spending, the impact of the money invested from the bonds may be limited and susceptible to embezzlement by local officials.
Zhao Chenxin, deputy director of the NDRC, mentioned that the funds will be fully distributed by the end of August.
Subsidies Expected to Yield Minor Results
Hsieh Chin-ho, chairman of Wealth Magazine in Taiwan, highlighted that 300 billion yuan is relatively insignificant given China’s weak domestic demand and economic challenges.
He also noted the negative impact of declining high-end consumer goods performance and the ongoing real estate bubble crisis in China.
The announcement also stated that the funds allocated to local governments must not be misused for balancing budgets or repaying debts, emphasizing the prevention of illegal activities like misappropriation and fraud.
Despite these measures, Hsieh is skeptical due to the lack of transparency in Chinese local governance, possibly leading to corrupt practices.
Xu Zhen, a senior Chinese capital market analyst, expressed doubts about the effectiveness of the stimulus policies, citing limited impact on boosting the economy and changing consumption patterns.
He emphasized that people’s spending behavior has shifted towards downsizing under economic pressures, reflecting a lack of confidence in the future and government, which poses a challenge to the CCP regime.
The phenomenon of “lying flat” signifies passive resistance among Chinese citizens, particularly the youth, by rejecting societal expectations of overworking and overachieving, opting instead for minimal survival efforts.
Ning Haizhong and Luo Ya also contributed to this report.
