* Academics advise against big stimulus package
* They join others making similar suggestions
* Follows market speculation about big stimulus
(Adds Xinhua report, details)
BEIJING, May 30 (Reuters) – China needs to boost investment
to spur economic growth but Beijing should shun aggressive
fiscal stimulus, influential academics said in remarks published
in leading state-backed newspapers on Wednesday.
They joined a chorus of commentary countering market
expectations that China might unveil a stimulus package similar
to the 4 trillion yuan in spending unleashed during the global
financial crisis.
Earlier this week, an official of the state planner, the
National Development and Reform Commission (NDRC), said a
large-scale economic stimulus package was unlikely.
An article published on the website of the official Xinhua
news agency said China had no plan to repeat the powerful
stimulus measures used during the global crisis in 2008.
“The Chinese government’s intention is very obvious: It will
not unveil another massive stimulus plan to stimulate economic
growth,” the Xinhua article said, without citing sources.
“Current policies to stabilise growth will not repeat the old
way of stimulating growth three years ago.”
It was not clear if the article, which also cited analysts,
represents official thinking – Beijing usually publishes
straight-forward commentaries, not analyses, when it wants to
explain its stance.
But the story was in line with the mainstream view among
Chinese policy advisers that Beijing will shun massive stimulus
as it struggles with the after-effects of the package unveiled
in late 2008.
Beijing is trying to clean up the roughly 10.7 trillion yuan
($1.7 trillion) in local government debt that resulted from the
stimulus package to counter the global financial crisis, which
has also been blamed for stoking inflation risks and fuelling a
frenzy of property speculation.
SLOW GROWTH
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 cited 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 several measures to boost domestic
consumption and private investment as the economy faces 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 on Tuesday cited unconfirmed
talk that Beijing was readying fresh stimulus. The tone had
reversed by the end of the trading day in China.
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 one in 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.
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.
The stimulus package during the global downturn fuelled
speculation in China’s real estate sector and left local
government with a mountain of 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.
($1 = 6.3480 yuan)
(Reporting by Aileen Wang and Nick Edwards; Editing by Don
Durfee and Neil Fullick)
