China’s economic tsar sends rare public message, warnings to future policymakers
- Vice-Premier Liu He, 70, has been instrumental in the development of China’s economy over the past decade, but drastic policy shifts could affect his legacy
- Liu reiterates the importance of boosting domestic demand and making supply-side reforms, but not reverting to full isolationism
Fresh calls by China’s economic tsar – including for continued supply-side reform and closer economic connections with the rest of the world – are not only a testament to his own legacy, they may also serve to muffle expectations for a quick and impactful stimulus.
Vice-Premier Liu He’s comments came as the market has been anticipating expansionary measures in the first year of President Xi Jinping’s third term, with a shift away from the current preoccupation with debt curbing, financial de-risking, and the removal of obsolete industrial capacity.
His assessment serves both as a reflection of his 10 years in the economic policymaking arena, and as a rare public message to future economic policymakers – potentially Li Qiang and He Lifeng.
Liu’s words, in an article published by party mouthpiece People’s Daily on Friday, run contrary to a time when excessive government spending on ineffective projects resulted in a massive accumulation of dangerous debt. And they appear as a warning against an overemphasis on self-sufficiency and isolationism.
“The factors restricting our country’s economic development mainly lie in the supply side, as manifested in the existence of bottlenecks, blocked points and vulnerable areas, and the current supply structure cannot adapt to the changes in the demand,” Liu wrote.
The People’s Daily article is part of a series about the new development guidelines – such as high-quality growth and common prosperity – that were outlined at the 20th party congress late last month. The top economic adviser didn’t appear in the new 24-member Politburo line-up, in a sign that he will step down in March.