Academics say another major round of fiscal stimulus could sacrifice quality growth
China needs investment to fuel economic growth but Beijing should stop short of launching a new round of aggressive fiscal stimulus, influential academics have said.
The comments, published in leading state-backed newspapers, came after an official of the state planner, the National Development and Reform Commission (NDRC), said a large economic-stimulus package of the sort unveiled during the global financial crisis was unlikely.
The top government researchers and economists warned that too much investment would reduce the efficiency of economic growth and exacerbate overcapacity in some industries. Liu Yuanchun, a professor at the Renmin University, was quoted in the official People’s Daily as saying: “It is not necessary for China to launch another massive 4tn yuan stimulus plan. We must hold off any impulse of making excessive investment.”
Chen Bingcai, a professor at the National Academy of Governance, warned against China expanding investment too much, sacrificing quality growth for high growth. Chen’s school teaches and trains many leaders of the central government.
“If Beijing returns to an investment boom again, the previous call of adjusting the economic structure would turn out to be nothing but empty talk,” the official China Securities Journal quoted Chen as saying.
China’s economy is on course this year to grow 8.2%, its slowest pace since 1999, according to the consensus forecast of investment bank economists in the latest Reuters poll.
Beijing has unveiled an array of measures recently to boost domestic consumption and private investment to try to cushion the economy from a slowdown in export demand growth.
Such moves include fast-tracking approval of infrastructure investment, offering subsidies for buying energy-saving home appliances and encouraging more private capital to enter a handful of sectors, which are dominated by state firms.
China’s 4tn yuan stimulus package to counter the 2008-09 global financial crisis fuelled speculation in the property sector, leaving a mountain of local-government debt.