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China Ex-Finance Minister Says Time to Consider Stimulus Exit: Caixin

Bloomberg logoBloomberg 11/13/2020 Bloomberg News
a man wearing a suit and tie: Lou Jiwei, China's finance minister, speaks during a a Group of 20 (G-20) finance ministers and central bank governors news conference on the sidelines of the International Monetary Fund (IMF) and World Bank Group Annual Meetings in Washington, D.C., U.S., on Friday, Oct. 7, 2016. The IMF warned this week that rising political tensions over globalization are threatening to derail a world recovery already seeking a reliable growth engine. © Bloomberg Lou Jiwei, China's finance minister, speaks during a a Group of 20 (G-20) finance ministers and central bank governors news conference on the sidelines of the International Monetary Fund (IMF) and World Bank Group Annual Meetings in Washington, D.C., U.S., on Friday, Oct. 7, 2016. The IMF warned this week that rising political tensions over globalization are threatening to derail a world recovery already seeking a reliable growth engine.

(Bloomberg) -- China’s ex-finance minister said it’s time to consider withdrawing the monetary stimulus injected into the economy this year and fine-tune fiscal policies as the recovery strengthens, according to a report by Caixin.

“It is time for China to study an orderly exit of loose monetary policies,” Caixin quoted Lou Jiwei, who was finance minister from 2013 to 2016, as saying at the Caixin Summit in Beijing Friday. That doesn’t mean it would be an immediate exit, he added.

a man wearing a suit and tie: Lou Jiwei, China's finance minister, speaks during a a Group of 20 (G-20) finance ministers and central bank governors news conference on the sidelines of the International Monetary Fund (IMF) and World Bank Group Annual Meetings in Washington, D.C., U.S., on Friday, Oct. 7, 2016. The IMF warned this week that rising political tensions over globalization are threatening to derail a world recovery already seeking a reliable growth engine. © Bloomberg Lou Jiwei, China's finance minister, speaks during a a Group of 20 (G-20) finance ministers and central bank governors news conference on the sidelines of the International Monetary Fund (IMF) and World Bank Group Annual Meetings in Washington, D.C., U.S., on Friday, Oct. 7, 2016. The IMF warned this week that rising political tensions over globalization are threatening to derail a world recovery already seeking a reliable growth engine.

The challenge is to carefully manage the pace of the exit, Lou said, given high debt levels in the economy. If liquidity is withdrawn too soon it could trigger debt crises, he said.

On fiscal policy, Lou said stimulus should be maintained at its current pace and be made less expansionary next year. Fiscal policies are usually medium-term and it takes a longer time to exit them compared to monetary policies, he said.

China’s economy has staged a steady recovery, benefiting from a rapid resumption in industrial production and robust exports. With virus cases under control and household income improving, consumption has also started to catch up.

Liu Guoqiang, vice governor of the People’s Bank of China, said last week that policy makers globally are discussing the timing of stimulus withdrawal and that an exit was a “matter of time.”

Lou also said at the Caixin Summit that U.S.-China relations are unlikely to get much better in the near term under a Joe Biden presidency. The U.S.’s curbs on China’s development is inevitable, he said.

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