More active fiscal policies needed for China
(20 July 2012 – China) The China Banking Regulatory Commission (CBRC) said the country’s recent credit loosening measures might not be as effective as expected without more active fiscal policies.
CBRC assistant chairman Yan Qingmin, said: 'Effects of credit loosening policies are waning as the demand for credit is weakening,' Yan said.
'Thus (we) urgently need support from fiscal and other policies.'
He noted that China can implement more active fiscal policies to stimulate its slowing economic growth since the fiscal deficit and government debt are well below alarming levels. Yan said the asset quality of local government financing vehicles has also improved.
He also said the government should raise thresholds for levying taxes on small firms and private businesses and local governments could help contribute to employees’ social insurance payments so small firms do not wear the burden.
China can't rely only on boosting liquidity to stimulate the economy because there is limited room for further credit supply, he said.
China recently took steps to loosen monetary policy by reducing interest rates for the second time in less than a month. Reliance on investment isn't sustainable, Yan said.
'Thus (we) urgently need support from fiscal and other policies.'
He noted that China can implement more active fiscal policies to stimulate its slowing economic growth since the fiscal deficit and government debt are well below alarming levels. Yan said the asset quality of local government financing vehicles has also improved.
He also said the government should raise thresholds for levying taxes on small firms and private businesses and local governments could help contribute to employees’ social insurance payments so small firms do not wear the burden.
China can't rely only on boosting liquidity to stimulate the economy because there is limited room for further credit supply, he said.
China recently took steps to loosen monetary policy by reducing interest rates for the second time in less than a month. Reliance on investment isn't sustainable, Yan said.
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