李稻葵：将理念「从公共财政转向公共金融」 多算资产负债表、少谈短期流动性

This article summarizes prominent Chinese economist Li Daokui's core judgments and policy recommendations on China's current economic situation, delivered at the 2026 Mid-Year Macroeconomic Forum:

1. China's economic fundamentals remain solid: the country has large unmet demand, ample household savings (boasting the highest savings rate among major global economies), abundant innovation capacity and labor supply, with 5 million new engineering graduates entering the workforce annually. This lays a solid foundation for long-term growth.

2. The core challenge facing the economy right now is "capital congestion": cumulative fixed asset investment fell 4.1% year-on-year from January to May, with manufacturing, private sector and real estate investment all recording contractions. Only infrastructure investment saw a modest 0.8% increase. A large share of available capital has been absorbed by local governments for debt repayment, pushing the share of local government spending in GDP down from 41% in 2020 to 35% in 2026. Since this capital does not flow into actual economic activity, the economy feels cooler than underlying data suggests.

3. Li proposes shifting the governing philosophy from public finance to public finance, focusing more on the government's overall balance sheet rather than short-term cash flow. To unclog capital flow, he recommends boosting housing demand, having local governments take over existing unsold housing inventory, and having the central government issue additional sovereign debt.

This article's analysis of China's macroeconomic trends and shifts in consumption and investment provides actionable insights for brands to refine strategy and align with industry direction. Key takeaways are as follows:

1. For consumer trends and user behavior: Overall household net worth and savings have risen, but consumers and investors have turned more cautious. Large unmet demand still exists in the market, so brands can develop high-quality, affordable products tailored to mass consumer needs to tap into rigid demand market opportunities.

2. For industry trends: Policymakers are preparing to take action to stabilize the real estate market and boost domestic demand, and the long-term outlook for China's economy remains positive. Brands can prioritize R&D along real estate upstream and downstream supply chains and in mass rigid demand segments to gain early market share.

3. For innovation: China's foundation for innovation is solid, with 5 million new engineering graduates entering the workforce each year, providing abundant innovation talent. Brands can increase investment in product innovation aligned with domestic consumption trends to build core competitive advantages.

This article outlines China's core macroeconomic challenges and upcoming policy shifts, providing opportunity and risk guidance for sellers. Key takeaways are as follows:

1. Opportunities: China still has large unmet consumer demand, solid fundamentals and positive long-term prospects. Policymakers will soon act to boost domestic demand and stabilize the real estate market. Sellers can pursue growth opportunities in real estate upstream and downstream segments such as home goods, home renovation and home appliances, and also expand offerings of rigid, high-value-ability products to match consumers' current cautious spending preferences.

2. Risks: Overall private sector and real economy investment is currently contracting, and consumer and business confidence remains weak. Sellers should control the risk of blind expansion and avoid taking on heavy leverage to enter non-rigid demand segments.

3. Strategic direction: Policy will gradually unclog capital flow and stimulate real economy investment. Sellers can pay close attention to upcoming policy dividends and lay out early in policy-supported segments to capture first-mover advantage.

This article's analysis of China's macroeconomic fundamentals and investment trends provides guidance for factories to adjust production strategy and identify new business opportunities. Key takeaways are as follows:

1. Innovative production: China has abundant innovation talent, with 5 million new engineering graduates entering the workforce annually, creating a solid foundation for innovation. Factories can increase R&D on innovative products to meet China's unmet consumer demand and improve product competitiveness.

2. Business opportunities: Policymakers are preparing to stabilize the real estate market and stimulate rigid housing demand. Factories can adjust production and design to align with real estate upstream and downstream demand, launch home goods, home renovation and construction materials tailored for the rigid demand market, and capture incremental demand.

3. Long-term development: Policy will gradually unclog capital flow and stimulate real economy investment. Factories can leverage this policy window to advance digital transformation, expand e-commerce sales channels, optimize production efficiency, and prepare for upcoming demand growth.

This article analyzes the core pain points in China's current economic operation and outlines future policy adjustments, providing reference for service providers to identify industry trends and customer demand. Key takeaways are as follows:

1. Customer pain points: The core "congestion" in China's current economy stems from local governments absorbing large amounts of financial capital for debt repayment, rather than deploying funds for actual economic activity. This means local governments need to transform their debt management philosophy. Service providers can develop targeted products for local government balance sheet management and existing asset revitalization to match unmet client demand.

2. Industry trends: Future policy will shift to a public finance framework that emphasizes government balance sheet management, while prioritizing real estate market stabilization and domestic demand growth. This will generate large market demand for local debt management services, real estate-related services and domestic demand-oriented services.

3. Long-term opportunities: China has abundant savings and strong innovation capacity, and real economy investment demand will gradually recover in the future. Service providers can lay out early in digital transformation services for physical enterprises, investment and financing consulting and other related fields to capture long-term market share.

This article's analysis of macroeconomic conditions and shifts in consumption and investment trends provides reference for platform operators to adjust recruitment strategies and optimize operations. Key takeaways are as follows:

1. Merchant recruitment strategy: There is still large unmet rigid demand on the consumer side, and consumers now prefer high-cost, value-for-money products amid a more cautious spending environment. Platforms can adjust their merchant recruitment mix to onboard more rigid demand brands and high-value-for-money sellers to match current consumer demand.

2. Operations management: Private sector and real economy investment is currently sluggish, but policymakers are preparing to boost domestic demand and unclog capital flow. Platforms can launch targeted support policies for physical merchants and emerging consumer brands to attract high-quality sellers and scale their business.

3. Risk mitigation: The economy currently feels sluggish to participants, and overall consumption and investment willingness remains low. Platforms should avoid the risk of overexpansion, control leverage reasonably, focus operations on core segments and improve efficiency, while waiting for policy dividends to materialize.

This article documents prominent economist Li Daokui's core judgments and policy recommendations on China's economy, delivered at the 2026 Mid-Year Macroeconomic Forum, offering new perspectives and core data for research on macroeconomics and local government debt. Key insights are as follows:

1. New perspective on core problems: The core bottleneck facing China's economy is not insufficient liquidity, but a philosophical bias in traditional public finance management. Large amounts of capital are absorbed by local governments for debt repayment and do not flow into actual investment activity, ultimately leading to contracting fixed asset investment and an underperforming economy. This framework breaks from traditional analysis that focuses on liquidity constraints.

2. New policy recommendations: Li proposes shifting the governing philosophy from public finance to public finance, replacing short-term annual cash flow accounting with whole-of-government balance sheet accounting. He also puts forward a package of actionable proposals, including having local governments take over unsold housing inventory to convert it into social welfare housing, and having the central government issue additional sovereign debt to stabilize the property market, opening a new direction for related policy research.

3. The article provides multiple sets of core research data, including changes in the share of local government spending in GDP, China's sovereign debt-to-GDP ratio, and fixed asset investment growth, offering empirical support for future research.