| inbluevt | Date: Sunday, 2013/07/14, 11:43 PM | Message # 1 | DMCA |
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BEIJING (MNI) - Arguments about whether China will grow at 7% or 7.5% are "pointless" because the economy is already in a financial crisis which may only worsen if the government doesn't address the country's crippling debt problem, a senior government researcher has warned.
Xia Bin, an economist with the State Council's Development Research Centerand government advisor, said Beijing needs to stop using bland rhetoric about "stabilizing the economy" and focus on tackling a debt burden whose interest payments alone tally nearly CNY6 trillion a year.
Although monetary printing presses have kept the worst of the crisis at bay, the central government needs to face up to China's debt problem and brace the market for a deep and painful adjustment, he told a forum here at the weekend.
"We need to find ways to let the bubble burst and write off the losses we already have as soon as possible to avoid an even bigger crisis," Xia said. "Deep adjustment means economic growth slows as costs are paid, it means hard days, it means the bankruptcy of some companies and financial institutions
and it means reform," he said. Although Xia has a reputation for being outspoken within a bureaucracy which tends to shy away from open discussion, his views reflect growing concern within the government about the costs of the credit and investment binge that was ushered in by the global financial crisis.
The former leadership, under President Hu Jintao and Premier Wen Jiabao,let local governments, state industry and the banking system off the leash at the end of 2008, a policy move which helped support Chinese and global growth during the worst of the crisis, but one which has left the economy saddled with unknown levels of debt estimated in the tens of trillions of yuan.
Xia said the government should mobilize its huge foreign exchange reserves,close bankrupt companies and encourage private investment to boost growth. He has long been a proponent of more actively using China's foreign exchange reserves, in opposition to the People's Bank of China's more
conservative approach to investment.
Message edited by inbluevt - Sunday, 2013/07/14, 11:47 PM |
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