Increased efforts required to stabilise China's economy: economists
China should make renewed efforts to keep the economy afloat as the nation faces growing downward pressure, according to leading economists.
At the annual Chinese Economists 50 Forum, economists called for increased measures to realize key economic goals for 2019 set by the government. These include stabilizing employment, the financial sector, trade, domestic investment and market confidence. National Economic Research Institute director Fan Gang said China should step up efforts to implement supply-side reforms and stabilize the economy, as investment-driven growth remains insufficient.
Some short-term measures are needed to maintain stable development, and more efforts can be made on the demand side, including moves to maneuver money supply and interest rates. Such efforts should not, however, include massive stimulus plans or repeat the old trick used in 2009 to revive the economy, according to Fan.
State Administration of Foreign Exchange deputy director Lu Lei said China should pay more attention to the risk of private debt at a time when external pressure might exacerbate existing challenges, referring to the risks of narrowing the spread between Chinese and US interest rates and SinoUS trade friction. To tackle challenges brought by local government debt, Li Yang, chairman of the National Finance and Development Institute with the Chinese Academy of Social Sciences, said China could learn from Japan's experience and establish financial institutions to provide cheap, long-term financing, particularly for local governments. The Chinese economy last year registered a 6.6 percent growth in GDP.
Meanwhile, China's consumer and producer price indexes rose less than forecast in January, official data showed. The consumer price index, a key gauge of the prices for goods and services, rose 1.7 percent year-on-year in January, lower than the expectations of 1.9 percent growth, according to the National Bureau of Statistics. The CPI rose 1.9 percent in December.
"The Spring Festival holiday in early February and the cold weather kept demand on an even keel in January," said Lin Shu, an analyst with China Merchant Securities. Experts said the prices and indicators are in line with the slower economic growth and said stable economic development will keep prices steady.
A research report by the Development Research Center of the State Council estimated that the prevention and control of African swine fever, the development of the housing rental market, the progress in advancing consumption policy and the implementation of a new personal income tax policy in 2019 will help stabilize CPI growth. The report said structural changes in consumption will gradually enhance the impact of services on CPI. In addition, the CPI is set to show a high-to-low year-on-year growth trend in 2019, with the annual inflation level expected to be around 2.2%, the report said.
China's January producer price index, which measures price increases before they reach consumers, rose 0.1 percent from a year ago, lower than the expected 0.3 percent rise, data from NBS showed. For the second month in a row, the index hit the lowest level since September 2016. In December, the PPI grew 0.9 percent year-on-year, according to the bureau.
The latest data saw PPI for January drop by 0.6 percent month-on-month and the prices of production materials by 0.8 percent. "A moderate rise in prices is likely this year," Ning Jizhe, head of the NBS, said during a news conference in Beijing last month.
A research report published by the NBS noted that, buoyed by supply-side structural reforms, the country's economy has registered a slower but stable performance with good momentum for growth.