MNI BRIEF: Policy To Be Supportive, Consumption Key To Growth

Consumption will be crucial in absorbing China’s excess capacity as external markets become less open, while policies are likely to remain supportive but not overly expansionary given rising central government leverage and ongoing efforts to repair the balance sheets of households, companies, financial institutions and local governments, People’s Bank of China monetary policy committee member Huang Yiping said Saturday at the Bund Summit in Shanghai.

Huang warned that China faces challenges in sustaining growth as it increasingly relies on the domestic market and seeks to upgrade its industrial base with new technologies — priorities highlighted in the latest proposal for the 15th Five-Year Plan. The plan places a strong focus on high-quality development and greater self-reliance in science and technological innovation.

He said he is watching policy steps aimed at boosting incomes and confidence, adding that income redistribution measures are already in the pipeline, though implementation has been relatively slow.

China continues to benefit from advances in technology that can lift its growth potential, Huang noted, but strong public policy will be needed to tackle the fallout from technological change, including potential unemployment. (See MNI: Relaxed Policy To Drive PBOC Over Next Five Years - Advrs)