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Published on Thursday, April 16, 2020

What’s in China’s policy arsenal to counter global recession?

This report analyzes the possible monetary and fiscal policy tools in front of the global economic recession led by COVID-19. We believe that fiscal policy should play a leading role. Regarding monetary easing, the interest rate cut progress should be more conservative while liquidity management should be enhanced.

Key points

  • Key points:
  • This report analyzes the possible monetary and fiscal policy tools in front of the global economic recession led by COVID-19.
  • Regarding the monetary policy, the room for interest cuts seems limited. We believe the interest rate cut progress should be more conservative while liquidity management should be enhanced.
  • For the fiscal policy, it should play a leading role in this round of stimulus. Main tools include: tax cuts and fee reductions , expanding local government bond issuance, increasing issuance of special government bonds, supporting the new infrastructure investment, etc.

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