China will not adopt a “flooding” stimulus plan to propel economic growth, said Li Pumin, secretary general of the National Development and Reform Commission, at a recent news conference.
Local media reported that scheduled fixed-asset investment (FAI) for 2017, covering 23 provinces, has exceeded 40 trillion yuan (US$5.8 trillion), causing speculation that there will be another round of strong stimulus.
Li said the speculation has confused the regular course of FAI with a “stimulus plan,” and that the two concepts cannot be compared.
FAI volume refers to the total, rather than newly-added investment, which includes not only government investment but also that provided by the private sector and foreign enterprises, Li said. In contrast, he argued, a “stimulus plan” is only adopted when the government needs to fuel weak domestic demand and maintain growth.
As the main obstacles to growth are created by supply, the country will focus on supply-side reform to increase effective supply and prevent the emergence of excess capacity and repetitive or redundant construction, while pursuing a moderate expansion of demand, Li said.