China advisers warn government against major stimulus to keep economy on track

Economic forum told that structural reforms will be the best way to unlock the country’s economic potential

Event in Sanya warned that government intervention to hit specific growth targets will have a negative effect

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Chinese policymakers have yet to set a growth target for next year. Photo: Reuters

Published: 7:00am, 8 Dec 2019Updated: 11:03am, 9 Dec 2019

China should refrain from using a large stimulus to guarantee a specific growth target in 2020 and proceed with structural reforms to unleash its potential, government advisers say.

Levin Zhu Yunlai, former chief executive of China International Capital Corporation, told a financial forum on Saturday that “short-term problems are not hard to solve”.

But he warned: “Any [government] measures would have negative effects.

“New problems surface in order to solve old ones. It’s a matter of choice. In the long run, the economy should return to a market orientation,” the son of former premier and leading reformer Zhu Rongji said at the event in Sanya, Hainan province.

New problems surface in order to solve old ones. It’s a matter of choice. In the long run, the economy should return to a market orientation

Levin Zhu Yunlai

There is a growing consensus among policymakers that Beijing should remain calm and focus on domestic reforms rather than allowing the US trade war and global economic slowdown to distract them.

However, Yu Yongding, a senior researcher with the Chinese Academy of Social Sciences, recently called for a larger government stimulus to ensure economic growth stays above the 6 per cent mark next year.

He said that global market confidence was already declining and many central banks had already started loosening their policies.