China wields significant policy room to stimulate its economy this year while some reform was needed to boost consumption, said Huang Yiping, an adviser to China’s central bank and a professor at Peking University, on Wednesday.
China unveiled fresh fiscal measures, including a rise in its annual budget deficit, to help hit an economic growth target of around 5% this year, which analysts have described as ambitious.
The central bank has pledged to cut interest rates and pump more money into the economy at an appropriate time. “There is still very big space in terms of macro policies,” Huang told Reuters on the sidelines of the annual Boao Forum. Macro policies will help tackle cyclical problems, while some structural challenges could be resolved in the future, he said.
Some reform measures, including those to increase people’s incomes and confidence, are needed to boost consumption, on top of recent moves unveiled by the government, Huang said.
Peng Sen, chairman of the China Society of Economic Reform, told the Boao Forum on Tuesday that China should take steps to boost consumption as a share of gross domestic product to 70% by 2035 from around 55% currently, narrowing the gap with developed nations.
Wider structural reforms include changes in institutional frameworks, income distribution, and fiscal and taxation systems will be needed to help boost spending, Peng said.
The Boao Forum, an international summit seen as Asia’s version of the World Economic Forum in Davos, Switzerland, is being held in China's Hainan province from Tuesday through Friday.
Policymakers have put expanding domestic demand, especially consumption, as the top priority this year as they try to cushion the impact of the Trump administration’s tariffs on its crucial export engine. Huang also told the forum that globalisation, which has benefited many Asian economies, could be reversed.
“Many of the most successful economies in the last half century or more, like East Asian economies, China and so on, all benefited from globalisation, but there is certainly a risk that the US-led globalisation may be reversed,” Huang said.
