In a rare display of dissent from the government’s policy direction, a chief researcher for China’s central bank criticised the country’s fiscal policy as a means of bolstering economic growth, at a time when Beijing is trying to balance a slowing economy with strict deleveraging.
Xu Zhong, director-general of the research bureau of the People’s Bank of China, said that the government had not used fiscal policy to adequately offset cyclical effects on China’s economy, which is being exacerbated by nationwide debt concerns.
“There is ample room for fiscal policy, but evidence shows that the policy is not being implemented actively enough,” said Xu in a speech seen by Caixin. China’s budget deficit target of 2.6% of GDP, down from 3% last year, points to contractionary fiscal policy when it should be playing a ‘countercyclical role’.
The response of some analysts was that Xu’s comments mark a plea from the central bank for government departments in charge of fiscal policy to be more involved in supporting growth, whilst some fellow officials rebuked the remarks, calling them “unprofessional” and defending the current policy.