(Yicai Global) July 25 -- As fiscal and monetary tools become less effective, more growth-friendly fiscal policies should be implemented, and expenditure should be expanded in countries that have more scope for spending, Chinese Minister of Finance Lou Jiwei said.
Mr. Lou also called for more co-ordination to promote sustainable growth during the third 2016 G20 Finance Ministers and Central Bank Governors Meeting held in Chengdu at the weekend. Developed economies should further increase the resilience of the labor market to promote growth in investments and productivity, while emerging economies should enhance economic resilience, lift restrictions, boost competition and press ahead with reform in the financial sector.
When asked about the role that the central fiscal authority plays in resolving risks for state-owned enterprises, Mr. Lou humorously responded in English, "Help but not bailout!" "Fiscal intervention instruments will not be used readily," he stressed.
There is less room for manoeuver in monetary policy and there is limited room for implementing fiscal policies in western countries, Mr. Shao Yu, chief economist at Orient Securities Co. told Yicai Global. In contrast, China can still use fiscal tools to promote structural reform.
The global central banks expressed their intent to enhance monetary easing after Britain's vote to leave the European Union. China's central bank has been taking prudent measures such as lowering the reserve requirement for domestic commercial banks.