A former deputy central bank governor said that China should refrain from boosting credit and fiscal spending to avoid fueling inflation and debt, Reuters reported. Beijing should be “extremely wary” about expanding government debt to offset a further recession in the global economy, Wu Xiaoling told a forum on Monday. Local governments have already reported some RMB10.7 trillion (US$1.68 trillion) in added debt after the country launched its RMB4 trillion (US$626 billion) stimulus package in late 2008. Moreover, strategists from Deutsche Bank estimate that another round of stimulus in China would be unlikely to exceed more than half of the country’s estimated RMB9.3 trillion (US$1.46 trillion) fiscal and monetary expansion from November 2008 through 2010, Bloomberg reported. The stimulus would likely be fiscal rather than monetary, Deutsche Bank economist Ma Jun wrote, citing conversations with government sources, and could include subsidies for consumer goods, electricity and water, temporary tax breaks for small businesses, and more investment in public housing and agricultural infrastructure.
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