Date
8 December 2016
Xiao Jie is expected to maintain an expansionary fiscal policy and push reforms to put a lid on rising debt levels in the economy. Photo: Reuters
Xiao Jie is expected to maintain an expansionary fiscal policy and push reforms to put a lid on rising debt levels in the economy. Photo: Reuters

China names new finance minister amid reform push

China has appointed a new finance minister who is expected to maintain an expansionary fiscal policy and push reforms to put a lid on rising debt levels in the economy.

Xiao Jie, a former tax chief and Ministry of Finance deputy minister, was named minister of finance, according to Reuters, citing a report from the official Xinhua new agency on Monday.

Xiao, 59, who is currently deputy secretary general of the State Council, replaces Lou Jiwei, who had served as finance minister since March 2013.

Xinhua did not say why Lou is stepping down, but analysts and policy advisors told Reuters that Lou has to retire as he is 65.

The reshuffle is expected to have little impact on fiscal policy, which is expected to be supportive in 2017 as the government leans more on increased spending and tax cuts to support growth, the analysts said.

Last month, President Xi Jinping said China will maintain a pro-active fiscal policy, adhere to prudent monetary policy and keep reasonably ample liquidity while focusing on controlling asset bubbles and controlling financial risks.

China’s current fiscal deficit target is 3 percent of gross domestic product (GDP), up from an actual 2.4 percent in 2015.

Some central bank officials have said China has room to raise its fiscal deficit ratio to between 4 and 5 percent to more effectively boost the economy.

Policy insiders expect Xiao to continue fiscal reforms, but President Xi is seen as calling the shots in setting the key economic and reform agenda.

Top leaders and policymakers are expected to map out the agenda for 2017 at the annual Central Economic Work Conference, expected in December.

Risks posted by China’s growing debt and red-hot property market have touched off an internal debate over whether China should tolerate growth as low as 6 percent in 2017 to allow more room for painful reforms.

China’s overall debt has jumped to more than 250 percent of GDP from 150 percent at the end of 2006, the kind of surge that in other countries has resulted in a financial bust or sharp economic slowdown, analysts say.

China also named Chen Wenqing as the new chief of the secretive Ministry of State Security, as well as a new head of civil affairs, at the closing of a regular session of the Standing Committee of the National People’s Congress, the country’s parliament.

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