China is being encouraged to allocate between $13 trillion and $1.4 trillion in order to combat deflation. The Financial Times reports that this recommendation comes as the country’s economic growth has been slowing down and concerns about deflation have been on the rise.
The Chinese government has been grappling with a range of economic challenges, including falling consumer prices and a slowdown in economic growth. In order to counter deflationary pressures, it is believed that a substantial fiscal stimulus package is needed. The proposed stimulus package would include investments in infrastructure, healthcare, education, and other key sectors of the economy.
The article suggests that such a large-scale spending plan could help boost domestic demand and stimulate economic growth. It also points out that the proposed stimulus package would likely lead to an increase in government debt, which could raise concerns about financial stability.
The Chinese government has already taken steps to address deflation by cutting interest rates and increasing government spending. However, these measures may not be enough to prevent deflation from taking hold in the economy. Therefore, experts are calling for a more aggressive approach to fiscal stimulus in order to combat deflation and jumpstart economic growth.
Overall, the Financial Times article highlights the challenges facing China’s economy and the need for decisive action to prevent deflation from further impacting the country’s economic prospects. It remains to be seen whether the Chinese government will heed these recommendations and implement a large-scale fiscal stimulus package to combat deflation.
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