Chinese policymakers are facing growing calls for economic stimulus, this time from several prominent state media and top government advisers.

The country’s three main state-run securities newspapers ran front-page articles Wednesday saying the central bank is likely to ease monetary policy further, citing well-known economists.

Separately, Xinhua News Agency reported that Wang Huning, the No. 4 official in China’s ruling Communist Party, held a meeting Tuesday with representatives of other Chinese political parties to discuss policy suggestions on reviving consumption. Liu Yuanchun, a prominent economist who’s previously consulted with top officials including President Xi Jinping, also called for interest rate cuts and other support measures in an interview with local media earlier this week.

Expectations for more monetary and fiscal stimulus have risen following the People’s Bank of China’s surprise rate cut last week, which economists said signaled a shift to more looser policy. So far, officials have been slow to follow up with any holistic package of support measures, with the State Council, China’s cabinet, saying late last week it was discussing proposals.

For now, authorities appear to be announcing incremental policy changes to spur consumption. The Ministry of Finance said on Wednesday that China will extend tax breaks for consumers buying new energy vehicles through 2027.

Some economists, like UBS AG’s Wang Tao and Citigroup Inc.’s Yu Xiangrong, say any major stimulus announcement may only come after the July meeting of the Communist Party’s Politburo, where economic policy will be discussed.

The yuan weakened past the closely watched level of 7.2 per dollar on Wednesday, with analysts saying markets are growing impatient about the lack of stimulus.

Several investment banks have downgraded their growth forecasts for China in the past week amid mounting evidence of a slowdown, although most of them expect Beijing to still meet its relatively conservative target of around 5% for the year.

Consumption Boost

Wang Huning said at the meeting Tuesday that consumption was key to achieving the target. The recovery and expansion in consumption is necessary to achieve Chinese-style modernization and high-quality development, as well as to realize this year’s growth goal, he said, according to a Xinhua report.

Liu said cutting interest rates was a key way to spur investment, calling for banks to reduce their loan rates further. He also said more easing was needed for the property market, proposing some cities further loosen curbs on property loans and purchases and financial support be given to leading real estate developers.

China Securities Journal, Shanghai Securities News and Securities Times cited multiple analysts forecasting more monetary stimulus in the second half of the year to shore up growth, after commercial banks reduced their lending rates on Tuesday.

Li Chao, chief economist at Zheshang Securities Co., said China may have greater space to ease monetary policy as the Federal Reserve likely enters a rate-cut cycle in the fourth quarter, according to Shanghai Securities News. That would reduce the divergence between the US and China’s economic and policy cycles.

Cuts to interest rates and the reserve requirement ratio are possible in the second half of the year, while the use of structural tools will continue, Li was cited as saying. Zhong Zhengsheng, chief economist at Ping An Securities Co., said another RRR cut is likely to take place in the second half of the year, while further rate cuts are also possible, according to the Shanghai Securities News.

Authorities may roll out more structural monetary policy tools such as relending programs to support sectors such as hi-tech manufacturing, Tianfeng Securities Co. analyst Song Xuetao said, according to China Securities Journal, also run by Xinhua.

The RRR rate could take place in the third quarter, which is a peak season for policy loans to mature, Citic Securities Co. economist Ming Ming said, according to China Securities Journal.

Morgan Stanley economists said in a note dated Tuesday that China is likely to roll out continued rate cuts, widen the fiscal deficit by expanding government bond quotas, announce more infrastructure investment, provide tax incentives to support high-end manufacturing and ease home purchase restrictions.

“Policy easing is imminent and necessary,” economists including Chetan Ahya wrote in the report. “We see easing helping to support a meaningful rebound in growth in the second half of 2023.”

--With assistance from Fran Wang.

(Updates with additional details.)