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China may be about to launch one of the largest consumer stimulus programs ever seen, with 1 trillion yuan injected directly into consumers’ pockets. This bold proposal, backed by renowned economist Li Daokui, could change the course of the global economy, and Brazil is at the center of this revolution.
Imagine a giant economy on the verge of a new economic experiment that could change the global course of consumption. This is what is happening in China, where an economic proposal that seemed unthinkable begins to gain strength in the highest circles of power. The idea? To inject trillions directly into consumers' pockets, stimulating consumption in an unprecedented way. But this story goes far beyond the numbers.
Is the Beijing government ready to finance its citizens’ consumption? And what are the implications for the global market? Get ready to discover how China can revolutionize global consumption with a proposal that has been discussed for over a year.
According to experts, the Chinese government is preparing a 1 trillion yuan stimulus for consumption. The proposal defended by renowned economist Li Daokui, professor at Tsinghua University, has gained prominence in recent weeks.
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According to him, the Chinese government is considering directly funding one-fifth of consumer spending during Golden Week., the week-long holiday that occurs in October.
This period is considered one of the most important for trade in the country, and the impact of a financial stimulus of this size could be gigantic. The estimated value is 1 trillion yuan, equivalent to almost R$800 billion.
Li Daokui is an influential figure in the Chinese economic scene and had been defending this idea for a year.
Now, with growing support from fellow economists and the repercussions in the official Communist Party media, like China Daily and People's Daily, the proposal seems to be getting closer and closer to reality.
Growing optimism and the details of consumer stimulus
Li's proposal is simple: During Golden Week, the government would subsidize 20% of purchases made by consumers.
In other words, if a Chinese person spends 1.000 yuan, 200 would be paid by the government. According to the economist, this quick and direct measure would help stimulate consumption, which is crucial for the resumption of economic growth.
He believes China needs to break the vicious cycle of low demand that has dragged the economy into a worrying slowdown.
“Reality is the best argument,” argues Li Daokui
Historically, China has traditionally focused its economic stimulus on the supply side, but that view is starting to change.
“We have always believed that the economy should be driven by supply, not consumption,” says Li, noting that the current crisis requires a new approach.
“Reality is the best argument,” argues the economist, emphasizing that the lack of consumption is the main obstacle to the growth of the Chinese economy today.
He also advocates removing barriers to consumption of goods such as motorcycles, which are rare in cities like Beijing. According to him, many of these restrictions are outdated and hinder the development of the domestic market.
China looks to Brazil as a reference in consumption
When analyzing the international scenario, Li Daokui highlights Brazil as an example of an economy driven by consumption.
He praises the behavior of Brazilians, who spend with more confidence, unlike the Chinese, who are more cautious about the future, concerned about retirement and health.
“We really admire Brazilian consumers,” says Li, suggesting that China should encourage a more consumption-oriented mindset to break the cycle of excessive savings and lack of demand.
This comparison with Brazil, made by Li after a trip to the country, also raises an interesting point about urbanization.
According to the economist, The urbanization rate in Brazil is over 80%, while in China, around 50% of people who work in cities do not actually live there.
He advocates policies that facilitate permanent migration to urban centers, which would further boost consumption.
Impacts of protectionism and the trade relationship with Brazil
Another point raised by Li Daokui is the growing protectionism against Chinese products in the United States, Europe and Brazil. Despite trade barriers, he believes demand for Chinese products is still high, especially in the US, whose economy is booming.
However, he warns that in a year or two, the slowdown in Western economies could create challenges for China, reinforcing the need to stimulate domestic consumption.
Regarding Brazil, Li highlights the importance of Beijing and Brasilia negotiating to reduce protectionist measures.
Furthermore, he is optimistic about the possibility of more Chinese factories being installed in the country, which would benefit both economies.
Li also believes that Brazil could join the Belt and Road Initiative, an ambitious Chinese international infrastructure project. “It’s a win-win deal,” he emphasizes.
Does China's future depend on domestic consumption?
As global protectionism and trade tensions rise, China appears to be preparing for a new chapter in its economy.
With Li Daokui's proposal gaining momentum, The Chinese government may be about to take a decisive step towards directly stimulating consumption.
However, there are still doubts about the long-term impact of this measure and whether it will be enough to contain the looming economic slowdown.
Now, the question remains: do you believe that Brazil would have to follow China's example and implement a plan to directly help Brazilians pay for their consumer items?
