24th September 2023 – (Hong Kong) A central bank adviser in China has suggested that the country should prioritise structural reforms, such as promoting entrepreneurship, instead of relying on macroeconomic policies to revive economic growth. Liu Shijin, a member of the People’s Bank of China’s monetary policy committee, highlighted the limited room for further monetary policy easing due to widening interest rate differentials with the United States. Speaking at a financial forum in Shanghai, Liu emphasized that a continued focus on macro policies could lead to more side effects and hinder the opportunity for structural reforms.
China’s economic recovery from the COVID-19 pandemic has faced challenges, including weak consumption, declining exports, and a deepening property debt crisis. Despite implementing various monetary and fiscal measures to boost confidence, the economy has struggled to regain momentum. Liu proposed a new round of structural reforms aimed at providing immediate support to the economy while also fostering long-term growth. These reforms include demand-side measures to ensure migrant workers have access to public services enjoyed by urban residents, as well as supply-side reforms that encourage entrepreneurship in emerging industries.
In a recent move to boost investor confidence, China’s top economic planning body announced the creation of a new department dedicated to supporting private businesses. This step comes as the government seeks to restore faith in the private sector following crackdowns on industries such as the internet and private tutoring. Liu emphasized the need for China to provide clearer recognition of the status of private businesses, both ideologically and politically.