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The PBOC should consider cutting banks' reserve requirement ratio by one percentage point in Q4 to release CNY1 trillion of liquidity to boost the economy, said Yao Jingyuan, a State Counselor in a briefing on Monday after Q3 GDP unexpectedly slowed to 4.9%.

CPI may stabilize at a low level around 1% this year, leaving space for monetary easing, Yao said. He added that though rising raw material costs have been pushing up PPI, the government is taming prices by ensuring supply and helping downstream producers.

Meanwhile, China should expand fiscal expenditure, especially by accelerating the issuance of over CNY1 trillion of unsold local government special bonds and kicking off as many major projects as possible to lift up investment, said Yao. Yao expects GDP to grow about 8% in 2021, as he believes exports will continue to drive the economy in Q4, while consumption may gradually rebound with the epidemic under control.