China’s Mini-Stimulus Policy: Effects and Defects
Chen Yanbin and Chen Xiaoliang
School of Economics, Renmin University of China, Beijing, China
Abstract: China’s mini-stimulus policy is justified for some proven effects on economic stabilization. However, the policy should not be used on regular, long-term base. Mini-stimulus economic policy is still essentially investment-driven and by nature no different from the four trillion yuan stimulus package introduced in the aftermath of the global financial crisis of 2008. The policy strength of mini-stimulus packages the Chinese government resorted to has already accumulated to ascend to quite an extent. Further, mini-stimulus policy cannot stabilize growth and promote economic restructuring simultaneously. In fact, its effects on restructuring are short-term and may even be negative. Additionally, the diminishing potency of China’s mini-stimulus policy efforts may force the government to resort to another hefty stimulus package with severe side effects. In the final analysis, it is social policy not economic stimuli that will help the Chinese economy achieve a soft landing.
Keywords: mini-stimulus economic policy, macro-economic policy, economic development model, economic restructuring