China’s latest stimulus efforts are not enough to lift its economy, says Chetan Ahya, Chief Asia Economist at Morgan Stanley. He highlights that a larger fiscal deficit aimed at boosting consumption is needed to address deflation.
Despite earlier announcements of fiscal packages, details on consumption-focused spending were missing, raising concerns. Ahya believes that without aggressive policy measures, China’s growth could stall at 4.6%, below its 5% target. He also warns that the lack of strong fiscal action may dampen investor confidence and question the sustainability of any economic recovery.