Investing.com — Wells Fargo analysts are expressing skepticism about China’s recent high-profile policy announcements, saying in a recent note that the move could have a significant impact on the country’s economic trajectory. It was suggested that there was a low possibility that it would have an impact.
The bank argued that the growth effects of these stimulus measures reflected past experience and did not address the underlying problems.
In recent weeks, the People’s Bank of China has eased monetary policy, and the Ministry of Finance has channeled fiscal resources primarily to the struggling real estate sector and local banks.
However, Wells Fargo believes that “the growth impact of the latest stimulus package announcements will remain the same for China, as few fiscal resources have been dedicated to supporting broader domestic demand.” There is.
Analysts argue that the strategies used over the past 15 years are insufficient to change China’s economic prospects in the short or long term.
They forecast that annual GDP growth will remain at around 4.5% over the next few years, stressing that policies focused only on stabilizing the real estate market and banking sector will not foster real consumer spending. There is.
“In our view, policy adjustments that do not include concrete stimulus measures to stimulate domestic consumption would be misplaced and ultimately inconsistent with the authorities’ intentions,” Wells Fargo said.
While the market is reacting optimistically to these announcements, Wells Fargo warns that the enthusiasm may be short-lived.
They warn that without strong measures to boost consumer confidence and spending, China could face persistent economic challenges.
Analysts conclude that unless China shifts its focus to stimulating domestic demand, current policy responses will remain a temporary fix rather than an effective long-term solution.
