China is expected to adopt more supportive fiscal and monetary policies, PBOC advisor said
China is expected to adopt more supportive monetary and fiscal policies to support its slowing economy, Huang Yiping, a central bank adviser and professor at Peking University, said on Saturday.
The remarks came days after China reported third-quarter gross domestic product (GDP) data along with a series of key activity indicators, which showed growth in the world’s second-largest economy slowed to its weakest pace in a year.
Frequent economic indicators, including export figures, have performed well, Huang said, but added that “if you look at some indicators related to sentiment, confidence and expectations, they are much weaker.”
Huang emphasized that macro, industrial and reform policies are high on the government’s policy agenda and offered two recommendations.
“I think what’s most likely to happen is that fiscal policy and monetary policy will become more supportive of growth,” Huang said at the Bund’s annual summit in Shanghai.
“But I don’t think we should expect a major expansion of the policy. On the other hand, the policy will become more supportive.”
As a second recommendation, Huang suggested the possibility of increasing central government leverage, which is relatively low compared with other developed countries, including the United States and Japan.
“What we can also do is develop more aggressive macroeconomic policies by using the influence of the central government or increasing the influence of the central government… trying to improve the balance sheets of households, companies, financial institutions and local governments,” Huang said.
China’s central government leverage ratio reached 28.8% of GDP at the end of September, official data showed.
China’s Communist Party elite this week pledged to build a modern industrial system and step up efforts to achieve technological independence, a move seen as key to strengthening its position in intensifying competition with the United States.
Source: Reuters
