SHANGHAI (Reuters) -China is expected to adopt more supportive monetary and fiscal policies to bolster its slowing economy, Huang Yiping, an adviser to the central bank and a professor at Peking University, said on Saturday.
The remarks come days after China reported its third-quarter gross domestic product data along with a series of key activity indicators, showing growth in the world’s second-largest economy slowed to the weakest pace in a year.
High-frequency economic indicators, including export numbers, have performed well, Huang said, but added that “if you look at some indicators related to the sentiment, confidence, and expectations, they are much weaker.”
Huang emphasised that macro, industrial and reform policies were highlights on the government’s policy agenda and offered two recommendations.
“I think what is most likely to happen is that fiscal policy and monetary policy will become more supportive to growth,” Huang told the annual Bund Summit in Shanghai.
“But I think we shouldn’t expect massive expansion of the policy. On the margin, they will become more supportive.”
As a second recommendation, Huang suggested a possible build-up of central government leverage, which was relatively low compared with other developed economies, including the United States and Japan.
“What we could also do is to put together a more aggressive macroeconomic policy using central government leverage or adding central government leverage … trying to repair balance sheets of households, enterprises, financial institutions and local governments,” Huang said.
China’s central government leverage ratio stood at 28.8% of GDP at the end of September, official data showed.
China’s Communist Party elite vowed this week to build a modern industrial system and step up efforts to achieve technological self-reliance, moves it sees as key to bolstering its position in its intensifying rivalry with the United States.
(Reporting by Shanghai Newsroom; Editing by Jacqueline Wong)
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