BEIJING — Chinese political advisers put their heads together on March 9 to tender prescriptions for the country’s slowing economy, appealing for less government intervention while underlining innovation.
Noting that the Chinese economy has enter a “new normal” phase of slower growth, Qian Yingyi, dean of the School of Economics and Management at Tsinghua University, warned the government against strong stimuli and overreliance on monetary policies by the central bank.
Demand-stimulating policies can work only temporarily and may further distort the Chinese economy which has already suffered from massive overcapacity, lowering investment returns and increasing environmental damage, Qian told fellow members of the National Committee of Chinese People’s Political Consultative Conference at a plenary meeting.
Monetary policies, meanwhile, must be accompanied by structural adjustments, he said while pointing to the US success in this regard.
The Chinese economy grew 7.4 percent in 2014, the weakest annual expansion in 24 years. The government has further lowered this year’s growth target to approximately 7 percent.
Qian said the Chinese economy is highly “tenacious,” and called on the government to allow for greater latitude for self-adjustments by the market and enterprises.
“It is like when a man is sick, aside from the medicines, his own body’s self-adjustments are also vital,” said Qian, also a counselor to China’s cabinet.
He said the government should streamline administration, speed up taxation reform and reform of state-owned enterprises, encourage innovation and entrepreneurship and play a bigger role in economic planning, coordination and infrastructure, rather than direct investment and manufacturing.
His remarks mirrored a government report delivered last week by Premier Li Keqiang, who reiterated the vision for a more healthy and effective economy that is powered more by consumption and the service sector instead of the traditional engines of manufacturing and investment.
As resource-related and environmental constraints grow and costs for labor and other factors of production rise, a model of development, that draws on high levels of investment and energy consumption and is heavily driven by quantitative expansion, becomes difficult to sustain, Li said.
Li Dang, vice-chairman of the China National Democratic Construction Association Central Committee, suggested that efforts be made to eliminate overcapacity by fair competition, mergers and reorganizations, as well as economic structural optimizations.
His words were echoed by Li Hejun, deputy head of the All-China Federation of Industry and Commerce, who called on authorities to cultivate more competitive industries such as high-speed railways via deepening reforms and innovation.
In his government work report, Premier Li said China needs to rely on both traditional and new engines to achieve 7 percent growth.
“We need to develop twin engines to drive development — popular entrepreneurship and innovation — paired with increased supplies of public goods and services,” he said.
Wen Simei, vice chairman of the Central Committee of the China Democratic League, a non-communist party, also highlighted the importance of entrepreneurship, calling for better policy support for college graduates in the regard.
Underlining innovation, Robin Li, chairman of the Chinese language search engine Baidu.com, suggested that the Chinese government establish a special fund for a “China Brain” project on artificial intelligence which could be applied to automatic driving, drones, military and civilian androids, among others.
Mei Xingbao, former president of China Orient Asset Management, pointed to the financing difficulties for China’s small and micro-businesses, calling to speed up establishment of small and medium-sized private banks.
By guiding and supporting private capital in the finance sector, the disharmony generated by “a huge amount of idle money” and “difficulties of small and micro-sized enterprises in accessing low-cost funds” might be resolved, he said.
His words were echoed by Li Daokui, head of Tsinghua University’s Center for China in the World Economy.
Authorities must step up reforms in China’s financial system in order to put financing difficulties to rest once and for all, he said.