The property slump has cost China about 3 percentage points of growth per year over the past three years, said Zhu Tian, Vice President of CElBS, a higher education institution jointly founded by the Chinese government and the European Union in 1994.

Zhu suggested the central government issue CNY8 trillion in treasury bonds, with half the proceeds used to provide each Chinese citizen with about CNY3,000 in consumption vouchers, which he said could boost GDP growth by more than 1.5 percentage points. The remaining CNY4 trillion should be used to support the property sector, including by purchasing existing housing inventory to help stabilise housing prices and curb their decline. (See MNI INTERVIEW: China Property Bailout Would Take 10% Of GDP)

The treasury bonds could be bought by the People's Bank of China in the secondary market through lenders, he said, noting that the central bank had little room to boost the economy by other means given low inflation and banks' already-compressed interest margins.

Other senior policy advisors have previously suggested that China could employ QE to support demand, including former PBOC monetary policy committee Yu Yongding, though the authorities have so far shown little sign of taking their advice. (See MNI INTERVIEW: PBOC Can Use QE Strategically If Necessary=YU）

Zhu also warned of slowing Chinese outbound direct investment to Europe as China tightens scrutiny of investment in key sectors.

Source｜MNI

Author: Zhu Tian, Vice President of CElBS