**Economic Stimulus and Reform Go Hand in Hand**
In response to the recent market frenzy surrounding the '10 trillion yuan stimulus plan,' Liu Shijin, the former deputy director of the State Council Development Research Center, has made a formal statement. At a recent forum hosted by the China Institute for New Type Urbanization at Tsinghua University, Liu emphasized that his previous remarks were not focused on '10 trillion yuan' but rather on the need to implement short-term stimulus measures to stabilize the economy.
As previously reported, Liu suggestion to address China's economic downturn included issuing long-term bonds to raise funds, with the goal of creating an economic stimulus package of at least 10 trillion yuan within a two-year period. In his forum address, Liu explained that economic stimulus comes at a cost, using a combination of stimulus and reform measures to build new institutions and policy frameworks that will support sustainable economic growth.
**Negative Demand Shocks Threaten Economic Growth**
According to Liu, the primary challenge facing the macroeconomy is the downward pressure on aggregate demand. Recent data indicate that important indicators such as consumption, employment, and fiscal policy have all shown clear signs of slowing or contracting.