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March 2, 2017

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Home » Business » Economy

Major stimulus measures not on the cards

CHINA will not flood the economy with government investment as it pursues more stable, healthy economic growth, an official with the top economic planner said yesterday.

“Instead, it will focus on supply-side reform for a modest expansion of aggregate demand,” Li Pumin, secretary-general of the National Development and Reform Commission, said at a news conference.

Li made the remarks when answering a question on whether China would roll out a major stimulus plan like in 2008.

“Stimulus plans are used to prop up weak demand with government investment under special circumstances,” he said, adding that it was different from the scale of fixed-asset investment.

It was reported that 23 provincial-level regions had announced FAI volume totaling 45 trillion yuan (US$6.5 trillion) for 2017, stoking concern of a gigantic stimulus plan.

Li dismissed the worries by saying FAI volume is the aggregate rather than newly added investment and includes investment from the public and private sectors.

The FAI volume of 32 provincial-level regions rose 7.9 percent year on year to 60.65 trillion yuan in 2016 and is likely to hit 65 trillion yuan, Li said.

After China’s economy entered a “new normal” stage, the major difficulties were a by-product of supply rather than demand, he said.

The addition of excessive production capacity and redundant projects will be forestalled, and more efforts will be made to meet demand with effective supply, he added.

China is trying to transition its export and investment-driven growth model into one that relies on consumption, innovation and the service sector.

Consumption contributed 64.6 percent to China’s economic growth in 2016, up 4.9 percentage points from 2015, official data showed.

Meanwhile, China has decided to adopt a “prudent and neutral” monetary policy this year to keep liquidity at an appropriate level and avoid large injections.

Official data released yesterday showed China’s manufacturing Purchasing Managers’ Index grew for the seventh month in a row to 51.6 in February.


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