Chinese Government think tank says economic slowdown “may last longer”

BEIJING - China’s leading Government think tank, the Chinese Academy of Social Sciences (CASS) says China’s current economic restructuring, which began in 2014 and has otherwise been referred to as the ‘new normal’, “may last for another three to five years, along with a decelerating growth rate, much longer than the previously estimated one or two years”, according to Academy deputy head, Li Yang.

“We have never felt such a strong sense of urgency to improve economic reforms as now,” he continued, mentioning that “new measures should be taken immediately to curb the slowdown”.

It has been speculated that the absence of certain supportive fiscal policies in Q2 could lead to a faster cooling of the economy and increased financial risks, as seen in the accelerating non-performing loans of lenders.

In the first quarter, China’s GDP slowed to a six-year low of 7%, a decrease of 0.3% from Q4 2014.

Among CASS’s recommendations regarding implementation of a more pro-active recovery strategy involve central bank participation in China’s local government debt replacement plan, meaning it should buy local government bonds at “ultra-low interest rates” to buttress base money growth and inject market liquidity. www.webershandwick.cn (ATI).