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Coronavirus pandemic
EconomyChina Economy

Coronavirus: China should avoid ‘bazooka’ efforts to rescue economy, warns top economist Yu Yongding

  • China has so far resisted in making major moves to offset the impact of Covid-19 in contrast to Europe and the United States
  • G20 leaders will hold a virtual meeting next week to put forward a coordinated set of policies in response to the global outbreak and its human and economic impact

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Yu Yongding’s comment is one side of an ongoing debate on whether China should enact a new round of economic stimulus measures immediately, or wait to ensure that the coronavirus outbreak is fully contained. Photo: Bloomberg
Frank Tang

China should not rush into following international calls for major stimulus efforts to fight off the economic impact of the coronavirus pandemic, according to prominent Chinese economist and former central bank adviser Yu Yongding.

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Yu’s comment is one side of an ongoing debate on whether China should enact a new round of economic stimulus measures immediately, or wait to ensure that the coronavirus outbreak is fully contained, and only then determine what needs to be done to support growth.
The International Monetary Fund on Tuesday called for a “coordinated and synchronised global fiscal stimulus” to bolster the world economy, given that private analysts now largely expect the world to fall into recession this year.

Yu, a senior researcher with the Chinese Academy of Social Sciences, argued that while China has more fiscal and monetary policy room to manoeuvre than its counterparts in Europe and the United States, the country’s top priority should be to focus on epidemic control and the full resumption of production in factories closed during the height of the outbreak.

Expansionary fiscal and monetary policy can be used later to win back the lost time as much as possible
Yu Yongding

“Expansionary fiscal and monetary policy can be used later to win back the lost time as much as possible,” said Yu, who is an advocate of economic stabilisation efforts.

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