Latest News:  
Beijing   Sunny    34 / 23 ℃  City Forecast

Home>>China Business

Sound, selective investment policy key to maintain Chinese economic health

(Xinhua)

08:08, July 20, 2012

BRUSSELS, July 19 (Xinhua) -- China needs to balance the need for expansive fiscal policy with more sound and selective investment policy to maintain economic health, a renowned scholar said in a recent interview with Xinhua.

"Otherwise, it would soon fall into the trap of Japan and Europe with escalating debts," said Hosuk Lee-Makiyama, director of the European Centre for International Political Economy (ECIPE), a Brussels-based thinktank.

Makiyama argued that Chinese top policy-makers have taken note of current problems, saying that "the current five year plan contains many of these elements for the structural reforms that are needed."

"But for the first time in recent Chinese history, a failure to deliver the plan will be costly and actually hurt the prospective for the Chinese economy," he warned.

When asked about his expertise on the so-called "Chinese collapse" theory, he said it was an exaggerated and misguiding speculation. "There may be a substantive risks from the slowdown or a possible financial crisis - but China is relatively fiscally and politically well-equipped to manage or pay itself out of a crisis."

The interview was conducted amid a number of signs of economic slowdown in recent months. Official statistics released last week showed that China's gross domestic product slowed to 7.6 percent in the second quarter, the lowest level in three years, where as industrial production growth also dropped to a record low of 9.5 percent year-on-year since 2009, below market expectations of 9.8 percent.

Meanwhile, the People's Bank of China, the Chinese central bank, lowered its benchmark interest rate twice within a period of one month, in a bid to encourage borrowing and lending, as well as economic activities.

Makiyama said Chinese economic policymakers at this stage were concerned to avoid a hard landing on the one hand, and to adopt necessary long-term reform with reorientation towards services and domestic demand on the other.

"It is very clear that China's economic planners are seeking moderation between short and long term," Makiyama remarked.

"Crisis policies, especially continued stimulus packages, have the risk of becoming permanent and will obstruct these long-term reforms. Measures that help on the short term may actually be counterproductive on a 5-10 year perspective," he warned.

Email|Print|Comments(Editor:李倩、厉振羽)

Leave your comment0 comments

  1. Name

  

Selections for you


  1. Elite anti-terror squad in tactical training

  2. NATO oil tankers destroyed in N. Afghanistan

  3. China faces a bumpy road to achieve stable growth

  4. HK's book fair opens with record high exhibitors

  5. Alien-like marine life in Arctic Ocean

  6. Scientists find evidence for exoplanet smaller than Earth

Most Popular

Opinions

  1. Ivy League not gold standard for teachers
  2. No need to panic about slowdown in China
  3. Commentary: Health of stock market
  4. S. China Sea tensions stirred up with outside help
  5. Elites threaten favorable Sino-US attitudes
  6. Europe's chances of economic recovery lie in unity
  7. Fragile peace barely holds in tense Kashmir
  8. Tokyo's islands stance harmful to ties
  9. Experts doubt legality of online auction
  10. Searching for the right professionals

What's happening in China

Fishing vessels arrive at Zhubi Reef of South China Sea

  1. China moves to curb academic degree fraud
  2. Authorities explain huge cost of highway signs
  3. 21,000 families not eligible for benefit
  4. Passenger blacklisted for flight delay complaints
  5. 2.3 million affected in central China rainstorms

China Features

  1. Famous instant noodle hit by quality scandal
  2. No abnormalities found in Roche investigations
  3. Auchan blacklisted for selling unqualified foods
  4. Robust water contains excessive level of bacteria
  5. Why is TCM worth of commendation?

PD Online Data

  1. Spring Festival
  2. Chinese ethnic odyssey
  3. Yangge in Shaanxi
  4. Gaoqiao in Northern China
  5. The drum dance in Ansai