Chinese Central Banker Voices Support for Supply-Side Reforms

Zhou Says He Backs Supply-Side Reforms
  • Fiscal policies to be more effective with overhaul of SOEs
  • Monetary policy to give more room for overcapacity cuts

Chinese central bank governor Zhou Xiaochuan voiced his support for the government’s plan to overhaul state-owned enterprises and reduce overcapacity, saying the reforms would make the country’s fiscal policy more effective.

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“Supply-side structural reforms will help fiscal policy to be more effective from a functional point of view," Zhou told reporters after attending legislative meetings in Beijing on Sunday. “Monetary policy is mainly for managing aggregate demand, which if done well would give more room for supply-side policies.”

Zhou Xiaochuan
Zhou Xiaochuan
Photographer: Qilai Shen/Bloomberg

More robust fiscal measures and structural reforms have both been proposed by Chinese authorities as methods for supporting an economy that expanded at the slowest pace in a quarter century last year. Premier Li Keqiang, during his annual work report delivered Saturday, outlined steps to support growth that included a record budget deficit this year along with steps to reduce unneeded capacity in steel and coal.

Zhou, speaking to reporters Sunday about what role the People’s Bank of China could play in such efforts, said appropriate financial policies would bolster such structural reforms. “We can make the financial structure better fit structural adjustment policies that tackle the issues of overcapacity cuts, leveraging and inventory de-stocking,” he said.


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Li’s annual work report and the meeting Zhou attended Sunday are part of the once-a-year full-session of the country’s legislature, the National People’s Congress, and also of China’s top advisory body, the Chinese People’s Political Consultative Conference. Zhou is also scheduled to speak with reporters at a briefing on March 12.

— With assistance by Keith Zhai

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