Outspoken Chinese economist Yu Yongding issues stagflation warning on Beijing’s fiscal policies

Yu Yongding, a former advisor to China's central bank and a well-known economist, has raised a red flag about the risk of 'stagflation' in China. Stagflation is when prices go up but the economy doesn't grow, and people stop buying things. He said this could happen if China doesn't use expansionary fiscal policies, which means the government should spend more money to boost the economy. Yu noticed that China's economy is growing slower and prices aren't rising much, which shows that people aren't spending enough.

To fight this, Beijing has decided to issue a lot of new bonds, which is like borrowing money to spend on projects and services. This will increase the country's debt a little, but Yu thinks it's necessary to avoid stagflation. He also believes China has a lot of room to increase its spending without causing problems. Yu pointed out that China is different from other countries because it doesn't rely too much on money borrowed from outside its borders.

Yu urged the government to reconsider some of its strategies, especially those aimed at reducing how much stuff factories make. He didn't say which specific policies need to change but emphasized the need to encourage people to start spending again. He also cautioned against assuming that China's economy will recover slowly without taking action, a situation he described as 'L-shaped growth. ' He stressed that it's not too late for China to take steps to prevent the economy from continuing to slow down.