BEIJING — More economists are calling for China to stimulate growth, including those based inside the country. China should issue at least 10 trillion yuan ($1.42 trillion) in ultra-long government bonds in the next year or two for investment in human capital, said Liu Shijin, former deputy head of the Development Research Center at the State Council, China's top executive body. That's according to a CNBC translation of Liu's Mandarin-language remarks available on financial data platform Wind Information. His presentation Saturday at Renmin University's China Macroeconomy Forum was titled: "A basket of stimulus and reform, an economic revitalization plan to substantially expand domestic demand." Liu said China should make a greater effort to address challenges faced by migrant workers in cities. He emphasized Beijing should not follow the same kind of stimulus as developed economies, such as simply cutting interest rates, because China has not yet reached that level of slowdown.

After a disappointing recovery last year from the Covid-19 pandemic, the world's second-largest economy has remained under pressure from a real estate slump and tepid consumer confidence. Official data in the last two months also points to slower growth in manufacturing. Exports have been the rare bright spot. Goldman Sachs earlier this month joined other institutions in cutting their annual growth forecast for China, reducing it to 4.7% from 4.9% estimated earlier. The reduction reflects recent data releases and delayed impact of fiscal policy versus the firm's prior expectations, the analysts said in a Sept. 15 note. "We believe the risk that China will miss the 'around 5%' full-year GDP growth target is on the rise, and thus the urgency for more demand-side easing measures is also increasing," the Goldman analysts said. China's highly anticipated Third Plenum meeting of top leaders in July largely reiterated existing policies, while saying the country would work to achieve its full-year targets announced in March. Beijing in late July announced more targeted plans to boost consumption with subsidies for trade-ins including upgrades of large equipment such as elevators. But several businesses said the moves were yet to have a meaningful impact. Retail sales rose by 2.1% in August from a year ago, among the slowest growth rates since the post-pandemic recovery.

Real estate drag

China in the last two years has also introduced several incremental moves to support real estate, which once accounted for more than a quarter of the Chinese economy. But the property slump persists, with related investment down more than 10% for the first eight months of the year. "The elephant in the room is the property market," said Xu Gao, Beijing-based chief economist at Bank of China International. He was speaking at an event last week organized by the Center for China and Globalization, a think tank based in Beijing. Xu said demand from China's consumers is there, but they don't want to buy property because of the risk the homes cannot be delivered. Apartments in China have typically been sold ahead of completion. Nomura estimated in late 2023 that about 20 million such pre-sold units remained unfinished. Homebuyers of one such project told CNBC earlier this year they had been waiting for eight years to get their homes. To restore confidence and stabilize the property market, Xu said that policymakers should bail out the property owners. "The current policy to stabilize the property market is clearly not enough," he said, noting the sector likely needs support at the scale of 3 trillion yuan, versus the roughly 300 billion yuan announced so far.

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