Economists predict that the Chinese government will further increase spending, especially in infrastructure construction, to stimulate economic development.

Michael Hirson, a Chinese economist at 22V Research LLC, an investment consulting firm in the United States, said in a report Thursday that if China is willing, it has a lot of room to increase its stimulus efforts. But the main obstacles at present are concerns about financial risks and the unwillingness to use increased central government spending to expand fiscal stimulus so far.

Nomura predicts that Beijing will increase the issuance quota of local government special bonds by an additional 500 billion yuan, bringing the total quota to 3.85 trillion yuan this year. According to Bloomberg data, a total of 4 trillion yuan of new special bonds were issued last year.

Bloomberg reported on Friday (June 16) that economists from Nomura Holdings and Standard Chartered Bank said that the Chinese government may increase the amount of local government special bonds, allowing them to borrow more funds to fund infrastructure projects. The central government may also issue special treasury bond as in 2020, or use Policy bank to stimulate lending.

According to the report, Chūgoku region's local governments, already heavily indebted, may be very cautious about the introduction of fiscal stimulus policies. But due to the economic downturn and low business confidence, officials who have been worried about excessive financial support may reconsider.

Insiders have revealed that senior Chinese government officials are soliciting opinions from business leaders and economists on how to revive the economy, and have held a series of meetings.

The People's Bank of China has lowered interest rates for the first time in nearly ten months this week. Economists expect the central bank to further relax policies by the end of this year.

On Thursday (15th), China's Economic Daily pointed out in a front page commentary that macroeconomic policies cannot be relaxed, and it is necessary to continue to increase demand and provide stronger support for the real economy. Fiscal expenditures should continue to be maintained at a relatively high level.