China should pursue structural reforms to revive economy, PBOC advisor says

China has limited room for additional monetary policy easing, and instead of relying on macroeconomic policies to spur development, a central bank advisor said.

Liu Shijin, a member of the People’s Bank of China’s (PBOC) monetary policy committee, said that rising interest rate differentials with the United States reduced Beijing’s room for monetary policy easing.

Chinese governments at all levels are under fiscal difficulty, he said at the annual Bund Summit meeting.

“If China continues to rely on macroeconomic measures in its efforts to stabilize GDP, there will be more and more side consequences,” Liu, deputy president of the State Council’s Development Research Center, said.

“More crucially, we will once again pass up an opportunity for systemic improvements,” he added.

China’s post-COVID recovery has stalled due to sluggish consumption, decreasing exports, and a worsening property loan issue, and the economy is struggling despite a barrage of monetary and fiscal measures designed to improve confidence.

Liu advocated a fresh set of structural changes that might help the economy quickly while also infusing long-term economic impetus.

“They include demand-side changes aimed at providing migrant workers with access to public facilities similar to those enjoyed by city inhabitants, as well as supply-side reforms aimed at kindling entrepreneurship in developing industries,” he said.