China should pursue structural reforms to revive economy, says its central bank advisor Liu Shijin
Rather than counting on macroeconomic policies to revive economic growth, China should pursue structural reforms such as encouraging entrepreneurs, news agency Reuters quoted PBOC adviser Liu Shijin, saying the Asian country has limited room for further monetary policy easing.
Shijin, a member of the People’s Bank of China’s (PBOC) monetary policy committee, opined that Beijing’s room for monetary policy easing was limited by widening interest rate differentials with the US.
Speaking at the annual Bund Summit conference, Shijin said that Chinese governments at various levels are under stress fiscally.
“If China continues to focus on macro policies in its efforts to stabilize growth, there would be more and more side effects,” Reuters quoted Shijin, vice president of the Development Research Center of the State Council, as saying.
“More importantly, we will again miss the opportunity for structural reforms,” he said.
Amid weak consumption, falling exports, and a deepening property debt crisis, China’s post-COVID recovery has lost momentum, while the economy is struggling despite a slew of monetary and fiscal measures to boost confidence.
On 24 September, Shijin proposed a new round of structural reforms which may aid the economy immediately, while also injecting long-term growth momentum.
The new round of structural reforms includes demand-side reforms with a focus on giving migrant workers access to public services enjoyed by city dwellers, as well as supply-side reforms that involve igniting entrepreneurship in emerging industries.
In September, China’s top economic planning body announced it would create a new department to help private businesses, citing Beijing’s seeks to revive investor confidence hurt by government crackdowns on sectors ranging from the internet to private tutoring.
China should give clearer recognition to private businesses’ status, both ideologically and politically, said Shijin.
Meanwhile on 23 September reports arrived that China would not be enough to fill all the empty apartments littered across the country.
Since 2021, after real estate giant China Evergrande Group defaulted on its debt obligations, the property sector has slumped in China. Even big firms like Country Garden Holdings continue to fall close to default.
According to data from the National Bureau of Statistics (NBS), the combined floor area of unsold homes stood at 648 million square meters at the end of August 2023.