CF40 Research: Three Channels for Expanding Domestic Demand

On December 11, an article on the official Weibo of the China Finance Forty Forum (CF40) pointed out that expanding aggregate demand, whether it is expanding consumption or investment demand, must be implemented in credit growth. When credit goes up, there will be more money in the pockets of residents, enterprises and the government, and spending and income will go up, and profits and investment will also go up. At this stage, expanding credit mainly depends on three factors: first, fiscal policy will be strengthened, and the government will borrow; second, monetary policy will be strengthened to reduce policy interest rates; third, the real estate market will be stabilized, and there will be no further sharp decline. On the fiscal front, maintain the intensity of broad fiscal expenditure, and moderately increase the fiscal deficit to 4% in 2025. In terms of monetary policy, we should take lowering real interest rates as an important goal, continue to implement "vigorous interest rate cuts", and timely reduce the interest rate of structural monetary policy tools below the policy interest rate level. In the property market, ease the cash flow pressure currently faced by real estate enterprises, and promote real estate from both supply and demand to stop falling and stabilize.