SCMP: "Beijing should expand central government borrowing and accelerate local debt restructuring, as China’s relatively low price levels offer a rare window for stronger fiscal support to bolster demand, according to some prominent Chinese economists." As always, this is pretty confused. It makes sense for businesses and households to borrow when interest rates are low because lower financing costs can raise net returns. Governments are different. Government borrowing is largely a transfer from one sector of the economy to another. In China’s case, “cheap” borrowing reduces the returns to net lenders, mainly households, in order to subsidize net borrowers. Yet Beijing knows that sustaining long-term growth requires doing the opposite: increasing the household share of GDP. The problem is that this has proved extraordinarily difficult, and the confusion over borrowing costs helps explain why. Lower interest rates are not necessarily good for China. They can actually deepen the imbalance by reducing the income of net savers, largely households, while making it cheaper for borrowers to sustain additional investment, much of which is already generating diminishing returns. Beijing should therefore not be looking for clever ways to tax households so that it can borrow more cheaply. It should be looking for ways to raise household income and discourage further misallocation of capital. via @scmpnews