According to an adviser of the Chinese central bank, China has little room for more monetary policy easing and should focus on structural changes like supporting businesses rather than relying on macroeconomic measures to boost GDP.

Beijing’s ability to ease its monetary policy is constrained by rising interest rate differentials with the United States, according to Liu Shijin, a member of the People’s Bank of China’s (PBOC) monetary policy committee, who spoke at a finance symposium in Shanghai.

He stated at the annual Bund Summit meeting that various levels of Chinese government are experiencing financial strain.

“If China continues to focus on macro policies in its efforts to stabilise growth, there would be more and more side effects,” said Liu, vice president of the Development Research Center of the State Council.

“More importantly, we will again miss the opportunity for structural reforms.”

In spite of a plethora of monetary and fiscal measures to promote confidence, China’s post-COVID recovery has stalled due to low consumption, declining exports, and a worsening property loan issue.

On Sunday, Liu outlined a fresh set of structural changes that will help the economy right away while also reviving long-term development momentum.

They include supply-side reforms that involve fostering entrepreneurship in new industries as well as demand-side reforms with a focus on providing migrant workers with access to public amenities enjoyed by city residents, he added.

Beijing is attempting to restore investor confidence damaged by government crackdowns on industries ranging from the internet to private tutoring. This month, China’s top economic planning agency announced it will establish a new department to assist private businesses.

Liu stated on Sunday that China should more explicitly recognise the position of private firms from an ideological and political standpoint.

(Adapted from Reuters.com)

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