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China stimulus calls are growing louder, at home and abroad

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Local residents with umbrellas walk out of a metro station in rain during morning rush hour on September 20, 2024 in Beijing, China. 

China News Service | China News Service | Getty Images

BEIJING — More economists are calling for China to stimulate growth, including those based inside the country.

China should issue at least 10 trillion yuan ($1.42 trillion) in ultra-long government bonds in the next year or two for investment in human capital, said Liu Shijin, former deputy head of the Development Research Center at the State Council, China’s top executive body.

That’s according to a CNBC translation of Liu’s Mandarin-language remarks available on financial data platform Wind Information.

His presentation Saturday at Renmin University’s China Macroeconomy Forum was titled: “A basket of stimulus and reform, an economic revitalization plan to substantially expand domestic demand.”

Liu said China should make a greater effort to address challenges faced by migrant workers in cities. He emphasized Beijing should not follow the same kind of stimulus as developed economies, such as simply cutting interest rates, because China has not yet reached that level of slowdown.

Cutting interest rates in China is irrelevant for its economy right now: Peter Boockvar

After a disappointing recovery last year from the Covid-19 pandemic, the world’s second-largest economy has remained under pressure from a real estate slump and tepid consumer confidence. Official data in the last two months also points to slower growth in manufacturing. Exports have been the rare bright spot.

Goldman Sachs earlier this month joined other institutions in cutting their annual growth forecast for China, reducing it to 4.7% from 4.9% estimated earlier. The reduction reflects recent data releases and delayed impact of fiscal policy versus the firm’s prior expectations, the analysts said in a Sept. 15 note.

“We believe the risk that China will miss the ‘around 5%’ full-year GDP growth target is on the rise, and thus the urgency for more demand-side easing measures is also increasing,” the Goldman analysts said.

China’s highly anticipated Third Plenum meeting of top leaders in July largely reiterated existing policies, while saying the country would work to achieve its full-year targets announced in March.

Beijing in late July announced more targeted plans to boost consumption with subsidies for trade-ins including upgrades of large equipment such as elevators.

But several businesses said the moves were yet to have a meaningful impact. Retail sales rose by 2.1% in August from a year ago, among the slowest growth rates since the post-pandemic recovery.

Real estate drag

China in the last two years has also introduced several incremental moves to support real estate, which once accounted for more than a quarter of the Chinese economy. But the property slump persists, with related investment down more than 10% for the first eight months of the year.

“The elephant in the room is the property market,” said Xu Gao, Beijing-based chief economist at Bank of China International. He was speaking at an event last week organized by the Center for China and Globalization, a think tank based in Beijing.

Xu said demand from China’s consumers is there, but they don’t want to buy property because of the risk the homes cannot be delivered.

Apartments in China have typically been sold ahead of completion. Nomura estimated in late 2023 that about 20 million such pre-sold units remained unfinished. Homebuyers of one such project told CNBC earlier this year they had been waiting for eight years to get their homes.

To restore confidence and stabilize the property market, Xu said that policymakers should bail out the property owners.

“The current policy to stabilize the property market is clearly not enough,” he said, noting the sector likely needs support at the scale of 3 trillion yuan, versus the roughly 300 billion yuan announced so far.

Different priorities

China’s top leaders have focused more on bolstering the country’s capabilities in advanced manufacturing and technology, especially in the face of growing U.S. restrictions on high tech.

“While the end-July Politburo meeting signaled an intention to escalate policy stimulus, the degree of escalation was incremental,” Gabriel Wildau, U.S.-based managing director at consulting firm Teneo, said in a note earlier this month.

“Top leaders appear content to limp towards this year’s GDP growth target of ‘around 5%,’ even if that target is achieved through nominal growth of around 4% combined with around 1% deflation,” he said.

In a rare high-level public comment about deflation, former People’s Bank of China governor Yi Gang said in early September that leaders “should focus on fighting the deflationary pressure” with “proactive fiscal policy and accommodative monetary policy.”

However, Wildau said that “Yi was never in the inner circle of top Chinese economic policymakers, and his influence has waned further since his retirement last year.”

Local government constraints

China’s latest report on retail sales, industrial production and fixed asset investment showed slower-than-expected growth.

“Despite the surge in government bond financing, infrastructure investment growth slowed markedly, as local governments are constrained by tight fiscal conditions,” Nomura’s Chief China Economist Ting Lu said in a Sept. 14 note.

“We believe China’s economy potentially faces a second wave of shocks,” he said. “Under these new shocks, conventional monetary policies reach their limits, so fiscal policies and reforms should take the front seat.”

The PBOC on Friday left one of its key benchmark rates unchanged, despite expectations the U.S. Federal Reserve’s rate cut earlier this week could support further monetary policy easing in China. Fiscal policy has been more restrained so far.

“In our view, Beijing should provide direct funding to stabilize the property market, as the housing crisis is the root cause of these shocks,” Nomura’s Lu said. “Beijing also needs to ramp up transfers [from the central government] to alleviate the fiscal burden on local governments before it can find longer-term solutions.”

China’s economy officially still grew by 5% in the first half of the year. Exports surged by a more-than-expected 8.7% in August from a year earlier.

In the “short term, we must really focus to be sure [to] successfully achieve this year’s 2024 growth goals, around 5%,” Zhu Guangyao, a former vice minister of finance, said at the Center for China and Globalization event last week. “We still have confidence to reach that goal.”

When asked about China’s financial reforms, he said it focuses on budget, regional fiscal reform and the relationship between central and local governments. Zhu noted some government revenue had been less than expected.

But he emphasized how China’s Third Plenum meeting focused on longer-term goals, which he said could be achieved with GDP growth between 4% and 5% annually in the coming decade.

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Warren Buffett’s top stock picks come with 15% income bonus in new ETF

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Invest like Buffett: VistaShares CEO on new ETF that follows the investor

In a year that hasn’t been kind to many big-name stocks, Warren Buffett’s Berkshire Hathaway is standing near the top. Berkshire shares have posted a 17% return year-to-date, while the S&P 500 index is down 6%.

That performance places Berkshire among the top 10% of the U.S. market’s large-cap leaders, and the run has been getting Buffett more attention ahead of next weekend’s annual Berkshire Hathaway shareholder meeting in Omaha, Nebraska. It’s also good timing for the recently launched VistaShares Target 15 Berkshire Select Income ETF (OMAH), which holds the top 20 most heavily weighted stocks in Berkshire Hathaway, as well as shares of Berkshire Hathaway. 

Berkshire is currently the biggest holding in the ETF, at 10.6% of the fund. Other top holdings in the ETF from among the ranks of Berkshire’s biggest bets include Apple, American Express, Kroger, VeriSign, Bank of America, Citigroup, Visa and of course Coca-Cola, a long time favorite of the man known as the Oracle of Omaha.

“It’s a really well-balanced portfolio chosen by the most successful investor the world has ever seen,” Adam Patti, CEO of VistaShares, said in an appearance this week on CNBC’s “ETF Edge.”

Berkshire’s outperformance of the S&P 500 isn’t limited to 2025. Buffett’s stock has tripled the performance of the market over the past year, and its 185% return over the past five years is more than double the performance of the S&P 500.

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Berkshire Hathaway is one of 2025’s top performing stocks.

In addition to this long-term track record of success in the market, Berkshire Hathaway is getting a lot of attention right now for the record amount of cash Buffett is holding as he trimmed stakes in big stocks including Apple, which has proven to be a great strategy. The S&P 500 has experienced extreme short-term volatility since President Donald Trump’s inauguration on January 20. Even after a recent recovery, the S&P is still down 8% since the start of Trump’s second term.

“The market has been momentum driven for many years, the switch has flipped and we’re looking at quality in terms of exposure, and Berkshire Hathaway has performed incredibly well this year, handily outperforming the S&P 500,” said Patti.

Berkshire Hathaway famously doesn’t pay a dividend, with Buffett holding firm over many decades in the belief that he can re-invest cash to create more value for shareholders. In a letter to shareholders in February, Buffett wrote that Berkshire shareholders “can rest assured that we will forever deploy a substantial majority of their money in equities — mostly American equities.”

The lack of a dividend payment has been an issue over the years for some shareholders at Berkshire who do want income from the market, according to Patti, who added that his firm conducted research among investors in designing the ETF. “Who doesn’t want to invest like Buffett, but with income?” he said.

So, in addition to being tied to the performance of Berkshire and the stock picks of Buffett, the VistaShares Target 15 Berkshire Select Income ETF is designed to produce income of 15% annually through a strategy of selling call options and distributing monthly payments of 1.25% to shareholders. This income strategy has become more popular in the ETF space, with more asset managers launching funds to capture income opportunities and more investors adopting the approach amid market volatility.

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More Americans buy groceries with buy now, pay later loans

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People shop for produce at a Walmart in Rosemead, California, on April 11, 2025. 

Frederic J. Brown | Afp | Getty Images

A growing number of Americans are using buy now, pay later loans to buy groceries, and more people are paying those bills late, according to new Lending Tree data released Friday

The figures are the latest indicator that some consumers are cracking under the pressure of an uncertain economy and are having trouble affording essentials such as groceries as they contend with persistent inflation, high interest rates and concerns around tariffs

In a survey conducted April 2-3 of 2,000 U.S. consumers ages 18 to 79, around half reported having used buy now, pay later services. Of those consumers, 25% of respondents said they were using BNPL loans to buy groceries, up from 14% in 2024 and 21% in 2023, the firm said.

Meanwhile, 41% of respondents said they made a late payment on a BNPL loan in the past year, up from 34% in the year prior, the survey found.

Lending Tree’s chief consumer finance analyst, Matt Schulz, said that of those respondents who said they paid a BNPL bill late, most said it was by no more than a week or so.

“A lot of people are struggling and looking for ways to extend their budget,” Schulz said. “Inflation is still a problem. Interest rates are still really high. There’s a lot of uncertainty around tariffs and other economic issues, and it’s all going to add up to a lot of people looking for ways to extend their budget however they can.”

“For an awful lot of people, that’s going to mean leaning on buy now, pay later loans, for better or for worse,” he said. 

He stopped short of calling the results a recession indicator but said conditions are expected to decline further before they get better.  

“I do think it’s going to get worse, at least in the short term,” said Schulz. “I don’t know that there’s a whole lot of reason to expect these numbers to get better in the near term.”

The loans, which allow consumers to split up purchases into several smaller payments, are a popular alternative to credit cards because they often don’t charge interest. But consumers can see high fees if they pay late, and they can run into problems if they stack up multiple loans. In Lending Tree’s survey, 60% of BNPL users said they’ve had multiple loans at once, with nearly a fourth saying they have held three or more at once. 

“It’s just really important for people to be cautious when they use these things, because even though they can be a really good interest-free tool to help you kind of make it from one paycheck to the next, there’s also a lot of risk in mismanaging it,” said Schulz. “So people should tread lightly.” 

Lending Tree’s findings come after Billboard revealed that about 60% of general admission Coachella attendees funded their concert tickets with buy now, pay later loans, sparking a debate on the state of the economy and how consumers are using debt to keep up their lifestyles. A recent announcement from DoorDash that it would begin accepting BNPL financing from Klarna for food deliveries led to widespread mockery and jokes that Americans were struggling so much that they were now being forced to finance cheeseburgers and burritos.

Over the last few years, consumers have held up relatively well, even in the face of persistent inflation and high interest rates, because the job market was strong and wage growth had kept up with inflation — at least for some workers. 

Earlier this year, however, large companies including Walmart and Delta Airlines began warning that the dynamic had begun to shift and they were seeing cracks in demand, which was leading to worse-than-expected sales forecasts. 

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