The world's second-largest economy is getting a long overdue makeover. That means slower growth.
Get over it, said one of China's top finance officials.
'Our top priority is restructuring,' China's vice finance minister, Zhu Guangyao, said in an interview Saturday on the sidelines of the International Monetary Fund and World Bank's spring meetings in Washington. 'We face the challenge of an economic slowdown. But very frankly I think the outside is more concerned than [we are] domestically with this slowdown.'
Mr. Zhu emphasized job creation, cleaning up the environment and passing legislation to give more budgetary freedom to China's heavily indebted provinces as the government's top objectives.
Mr. Zhu's comments echoed remarks Thursday by Premier Li Keqiang at an annual gathering of business and political leaders in China. Mr. Li told the gathering that Beijing would not resort to new stimulus measures just to meet its target of 7.5% growth, and that it was willing to accept some fluctuation as growth slows.
Dimming prospects for immediate stimulus may disappoint investors who bet recently that Beijing would be forced to step in to arrest a sharper-than-expected slowdown. Beijing is due Wednesday to report growth figures for the first three months of this year, and many economists have been trimming their forecasts.
But the message that China is determined to endure short-term economic pain to press ahead with structural reforms is likely to encourage economists who say China needs to move quickly to wean its economy from runaway credit, over-investment and excess capacity.
'The risk is not slower growth,' said Markus Rodlauer, deputy director of the IMF's Asia and Pacific Department and head of the fund's China mission. 'The risk is that growth is not allowed to slow.'
Jobs appear to be China's new benchmark. Mr. Zhu stressed the challenge of meeting the government's goal of creating 10 million new jobs this year.
China is also concerned, Mr. Zhu said, about low inflation and falling producer prices. China's producer-price index fell 2.3% year-over-year in March, after a 2% fall in February, marking the 25th consecutive month of declines.
Beijing is working to clean up an explosion of unregulated credit issued outside the banking system, Mr. Zhu said, including the 17.9 trillion yuan in debts owed by local governments as of last June, more than a third of which must be repaid this year.
Analysts worry that slowing growth and falling prices could touch off a wave of bankruptcies and even a financial crisis. Booming credit growth has swollen debt in China to roughly double GDP.
But underpinning the explosion in credit has been a widespread assumption among creditors that Beijing is unwilling to allow widespread defaults and that loans thus bear virtually no risk -- what bankers know as 'moral hazard.'
Sidestepping a question on whether Beijing would allow large borrowers or provincial governments to default, Mr. Zhu summed up Beijing's conundrum: 'We must pay close attention to the balance between moral hazard when we take action to make this risk abate, and at the same time we must avoid causing financial systematic turbulence.'
Mr. Zhu said local governments had sufficient assets to avoid default. But he said they could no longer be allowed to keep borrowing through affiliated financing vehicles. Rather, they needed to be given the authority to borrow directly, an authority that required new legislation be passed by China's National People's Congress. 'We must close the back door to open the front door,' he said.
Mr. Zhu also emphasized the need to reduce China's dire environmental pollution. Channeling investment into green industries and improved environmental standards, he said, could also help achieve its goal of promoting domestic consumption and the service sector. 'Environment-led investment or green-led investment must be absolutely emphasized,' he said.
Mr. Zhu dismissed concerns at the IMF and the U.S. Treasury Department about the yuan's recent weakness and its potential impact on trade following a move by the People's Bank of China to widen the range it allows China's currency to fluctuate. Mr. Zhu said the decline was part of an effort to liberalize China's capital markets and let the market determine the currency's value.
But Mr. Zhu said the U.S. Federal Reserve needed to be more mindful of the impact of its policies on the rest of the world. The Fed's plans to end its bond-buying program -- intended to inject credit into the economy -- stands to affect China and the rest of the world, he said. 'That's why we hope the Federal Reserve will take into consideration the severe impact,' he said.
中国财政部副部长朱光耀周六在国际货币基金组织(International Monetary Fund, 简称IMF)和世界银行(World Bank)于华盛顿召开的春季会议的间隙接受采访时说，中国的首要任务是经济结构调整。他说：我们面临经济放缓的挑战，但非常坦率地说，我认为与国内相比，国外对中国经济放缓的担忧更大。
不过朱光耀还称，美国联邦储备委员会(Federal Reserve, 简称：美联储)需要更加留意其政策对世界其他国家的影响。他说，美联储结束购债措施的计划将会对中国和世界其他国家构成影响。美联储的购债措施旨在向美国经济注入信贷。朱光耀说，正因如此，中国才希望美联储能够考虑到其政策带来的重大影响。