China’s central bank is caught in a debate over whether it should buy government bonds directly to support fiscal stimulus, as the world’s second-largest economy takes a hit from the coronavirus lockdown.

The People’s Bank of China (PBoC) should monetise fiscal deficits, said Liu Shangxi, head of the Chinese Academy of Fiscal Sciences, a think-tank affiliated with the finance ministry. Beijing is trying to pump up the economy, which shrank 6.8% in the first quarter of 2020.

“It is necessary to

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