BEIJING, May 30 (Reuters) – China needs an appropriate
amount of investment to spur economic growth but Beijing should
not launch a new round of aggressive fiscal stimulus,
influential academics said in remarks published in leading
state-backed newspapers on Wednesday.
They followed comments earlier this week from an official of
the state planner, the National Development and Reform
Commission (NDRC), who said a large scale economic stimulus
package of the sort unveiled during the global financial crisis
was unlikely.
The top government researchers and economists warned that
excessive investment would reduce the efficiency of economic
growth and exacerbate over capacity in some industries.
“It is not necessary for China to launch another massive 4
trillion yuan stimulus plan. We must hold off any impulse of
making excessive investment,” said Liu Yuanchun, a professor at
the Renmin University, according to the official People’s Daily,
the mouthpiece newspaper of the ruling Communist Party.
Chen Bingcai, a professor at the National Academy of
Governance, said China must not overly expand investment and
sacrifice quality growth for high growth. Chen’s school teaches
and trains many senior 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 citing Chen as saying.
China’s economy is on course this year to grow 8.2 percent,
its slowest pace since 1999, according to the consensus forecast
of investment bank economists in the latest benchmark Reuters
poll.
Beijing has unveiled an array of measures recently to boost
domestic consumption and private investment to try to cushion
the economy from the headwinds of a slowdown in export demand
growth.
Such moves include fast tracking approval of infrastructure
investment, offering subsidies for buying energy-saving home
appliances, encouraging more private capital to enter a handful
of sectors, which are dominated by state firms. [ ID :nL4E8GT3QX]
The NDRC, China’s top economic planning agency, gave the
green light to around 100 projects on May 21, fanning
speculation that Beijing may initiate a new fiscal spending
spree.
FRENZIED SPECULATION
Global financial markets have been caught in a frenzy of
speculation on the subject, which lingered on Wednesday.
Local media reports in China began the day on Tuesday citing
unconfirmed talk that Beijing was readying fresh stimulus. By
the end of the trading day in China the tone had reversed.
Media began citing a microblog reference to a news briefing,
purported to have been held by the NDRC, denying that a stimulus
package like the 4 trillion yuan ($635 billion) plan during the
global financial crisis was in the pipeline.
The original Twitter-like microblog entry, reported by local
media to have been on the official Xinhua microblog, could not
be found when checked by Reuters. There was no mention of it on
the Xinhua newswire or its public website.
The NDRC website carried no reference to the report, or a
news conference and declined to comment when contacted by
Reuters.
The later Chinese media reports cited the NRDC as saying
there had been a misinterpretation of the May 21 announcements
and that the project approvals had nothing to do with efforts to
stabilise economic growth.
China’s main news portal,
, also cited a
document from the NDRC branch in central Hunan province as
saying that China would not roll out huge investment, as seen in
the previous stimulus package, and Beijing would not relax
property tightening policies, blamed by many for slowing
domestic activity.
Luo Guosan, deputy director of the investment office at the
NDRC, had said earlier in the week that there was little chance
of Beijing unveiling another big spending plan to pump-prime the
economy.
“We want to target and maintain a reasonable level of
investment in society to stabilise economic growth. To think
about having another large-scale government-led investment spurt
to stimulate economic growth, that is unlikely because it is not
sustainable,” Luo was quoted as saying in the Chongqing
Commercial Daily on Monday.
China’s mammoth 4 trillion yuan stimulus package to counter
the 2008-09 global financial crisis fuelled speculation in the
real estate sector and left a mountain of local government debt.
“We should pay attention to the investment growth pace, as
the previous 4 trillion yuan stimulus plan has left us with many
uncompleted projects. If we start new projects again, we may
finally fail to wean the economy from investment,” Bai Chongen,
a professor at the Tsinghua University, was quoted as saying by
the People’s Daily.
(Reporting by Aileen Wang and Nick Edwards)
