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Yao Yang: China Has No Need for ‘Monetary Flooding’

Jun 21-2020   



 

The recent National People’s Congress (NPC) and National People’s Political Consultative Conference (NPPCC) have put forth the macro-economic guidelines for this year. People’s livelihood and jobs, in what’s called ‘Six-Guarantee Policies’, are prioritized, while a large-scale stimulus package has no place in the guidelines. The government report hasn’t set an economic growth target for the year mainly to avoid that local governments pass into the decade-long cycle of ballooning commercial debts, says Prof. Yao Yang, Dean of the NSD, in a commentary for The Global Times.

 

The Central Government will take on one trillion yuan in treasury bonds and another one trillion yuan in pandemic-oriented ad-hoc bonds which are required to directly reach cities and counties for their investment needs. Meanwhile, it’s advisable to guard against local governments’ temptation to borrow through commercial debts on a large scale. On the monetary side, the focus is put on ensuring funds getting to the neediest enterprises of medium, small and micro-sizes.

 

Compared with the trillion-dollar stimulus plus of some Western countries, the Chinese government has shown significant restraints with regard to fiscal and monetary policies for post-pandemic economic recovery. For Prof. Yao, such restraints are solidly rooted in China’s economic performance.

 

For a starter, prior to the breakout of the pandemic, the Chinese economic had already got into a fast track for re-building growth, the momentum of which is unlikely to be altered by the pandemic. Besides, with the pandemic under effective control, the Chinese economy has embarked on a strong recovery and is on way to pull off positive growth for the whole year. Moreover, to protect people’s livelihood and jobs will naturally stimulate the economy, for it targets the most critical challenges brought by the pandemic: declining disposable incomes and consumption.

 

The massive quantitative easing in the West, on the other hand, will sow seeds of trouble for the future. The US government is piling on massive debts vis-à-vis its own people and other nations, and the Wall Street might be creating a mirage of prosperity by benefiting the rich and sacrificing the poor. The game will one day run into a dead end, argues Prof. Yao.

 

Yao Yang: China Has No Need for ‘Monetary Flooding’

Jun 21-2020   



 

The recent National People’s Congress (NPC) and National People’s Political Consultative Conference (NPPCC) have put forth the macro-economic guidelines for this year. People’s livelihood and jobs, in what’s called ‘Six-Guarantee Policies’, are prioritized, while a large-scale stimulus package has no place in the guidelines. The government report hasn’t set an economic growth target for the year mainly to avoid that local governments pass into the decade-long cycle of ballooning commercial debts, says Prof. Yao Yang, Dean of the NSD, in a commentary for The Global Times.

 

The Central Government will take on one trillion yuan in treasury bonds and another one trillion yuan in pandemic-oriented ad-hoc bonds which are required to directly reach cities and counties for their investment needs. Meanwhile, it’s advisable to guard against local governments’ temptation to borrow through commercial debts on a large scale. On the monetary side, the focus is put on ensuring funds getting to the neediest enterprises of medium, small and micro-sizes.

 

Compared with the trillion-dollar stimulus plus of some Western countries, the Chinese government has shown significant restraints with regard to fiscal and monetary policies for post-pandemic economic recovery. For Prof. Yao, such restraints are solidly rooted in China’s economic performance.

 

For a starter, prior to the breakout of the pandemic, the Chinese economic had already got into a fast track for re-building growth, the momentum of which is unlikely to be altered by the pandemic. Besides, with the pandemic under effective control, the Chinese economy has embarked on a strong recovery and is on way to pull off positive growth for the whole year. Moreover, to protect people’s livelihood and jobs will naturally stimulate the economy, for it targets the most critical challenges brought by the pandemic: declining disposable incomes and consumption.

 

The massive quantitative easing in the West, on the other hand, will sow seeds of trouble for the future. The US government is piling on massive debts vis-à-vis its own people and other nations, and the Wall Street might be creating a mirage of prosperity by benefiting the rich and sacrificing the poor. The game will one day run into a dead end, argues Prof. Yao.