Economist: Don't overstate pessimism on China
- By Guo Yiming
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E-mail China.org.cn, March 4, 2016
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Jia Kang, a senior economist and political advisor, answers questions during an exclusive interview with China.org.cn in Beijing on Thursday. [Photo by Guo Yiming / China.org.cn] |
Foreign remarks on China's "economic collapse" should not be misinterpreted against the general picture of the upbeat performance after several rounds of structural reforms, said Jia Kang, senior economist and political advisor during an exclusive interview with China.org.cn in Beijing on Thursday.
"Against the backdrop of mounting downward pressure, China still has ‘ample weapons in its arsenal' to broker sound and stabilized growth," explained Jia, who formerly served as the director of the Institute of Fiscal Science Research under the Ministry of Finance during the ongoing annual sessions of China's legislature and its top political advisory body in Beijing.
Ratings agency Moody has raised a red flag over China's growing government debt, further capital outflows and uncertainties to implement economic reforms as it lowers its outlook on the country's sovereign bonds from stable to negative on Mar. 2.
Ahead of Moody's pessimism, concerns over China have already roiled global markets amid waning investor confidence. Billionaire George Soros said China's hard landing is practically unavoidable, a slump that will worsen global deflationary pressures, drag down stocks and boost U.S. government bonds.
Is China's economy really heading for a collapse? Economists are doubtful.
"On the bright side, foreign pessimism serves as a wake-up call for China as the country faces more problems and daunting pressures," Jia told the reporter. "On the other hand, we should not misinterpret those remarks and avoid drawing irrational conclusions."
Bearish arguments won't draw the economy into recession, but self-inflicted errors will, he added.
The Chinese government still has ample measures in its toolbox to promote growth. On Monday, the People's Bank of China (PBOC) announced it will reduce the reserve requirement ratio for banks by 0.5 percentage points, the first such operation in China in 2016.
"Stabilized growth is gathering momentum as several rounds of interests and bank reserve cuts are producing desirable results," he said, and adding that Monday's cut signaled additional, bold pro-growth measures on the horizon amid economic overhauls.
