Stimulus plans - China to continue proactive fiscal policy in H2

The Chinese government has made clear that it will continue its proactive fiscal policy in the second half of this year to maintain its economic growth as government leaders reiterated the stance, for there are still uncertainties ahead.

Mr Xie Xuren Finance Minister of China said the proactive policies, which included increased investment from the government, tax cuts and subsidies to low income families had taken effect in stimulating the recovery of the national economy.

He said that government will implement the fiscal policy at full swing in the H2 of this year and speed up allocation of investment from government which would stimulate private investment.

Mr Yang Zhiyong researcher of the Institute of Finance and Trade Economics at the Chinese Academy of Social Sciences a government think tank, said that currently the proactive fiscal policy had a limited impact on pushing up private investment. It is hard for private investment to enter monopolistic sectors.

Mr Li Yining an economist from the Peking University, said consumption should be spurred to fuel the growth momentum in the future as the current economic recovery was advanced mainly by investment. He suggested the proactive policy be further carried out to stimulate consumption and private investment in the following period.

Mr Xie said in the second half the ministry will continue its policy of tax cuts to increase investment from enterprises and consumption.

The ministry also pledged to increase spending on people's livelihood. Investment in agriculture, social security, medical care, education, science and environmental protection climbed 33.9% from a year earlier to CNY 1.48 trillion.

Analysts said the macroeconomic polices should also aim to adjust economic structure for the long term and to create new growth points.

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