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China shuns short-term stimulus
Last Updated: 2013-11-05 00:28 | Global Times
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China will adopt reforms rather than short-term stimulus, as well as relying more on private entrepreneurs to bring vitality to the economy, the Xinhua News Agency reported Monday, citing recent speeches from PremierLi Keqiang.

The government will maintain policy stability and insist on not expanding fiscal deficits, not overly increasing currency circulation and not using short-term stimulus to boost economic growth, Li said at a conference held by the All China Federation of Trade Unions on October 21.

Instead, the government will push forward reforms to bring vitality to the economy, Li said.

According to Li, a package of comprehensive reforms will include the disclosure of fiscal budgets, cutting spending on official receptions, vehicles and overseas travel, as well as liberalizing interest rates to make micro- and small-sized firms have easier access to loans.

"Of course, reforms will affect certain interest groups, but we must push forward reforms without hesitation for people's benefits," Li said.

"Li's speech has sent a signal that the new leadership will adopt a different approach to boost growth," Zhou Jingtong, a senior analyst at the Bank of China, told the Global Times on Monday.

"It also means the country's economic growth rate will not be pushed too high by loose monetary policies or huge fiscal stimulus compared with previous years," Zhou said.

At a conference with scholars and businesspeople on Thursday, Li said that the confidence in China's economy mainly comes from the confidence of entrepreneurs.

"Entrepreneurs, especially those from private companies, want to gain more trust from the government," he said.

Jack Ma, executive chairman of e-commerce giant Alibaba Group, and Li Shufu, chairman of Zhejiang Geely Holdings Group, both of which are private companies, attended the meeting.

In most cases, China's powerful State-owned enterprises (SOEs) and smaller private businesses are usually not competing on a level playing field, since SOEs are usually backed by richer government connections and more capital.

Zhou Dewen, president of the Wenzhou Council for the Promotion of Small and Medium-sized Enterprises, told the Global Times Monday that many private companies are not motivated to innovate, because they feel that they are being discriminated.

However, he said he is optimistic that the central government will announce policies during the upcoming Third Plenary Session of the 18th Communist Party of China (CPC) aiming at better protecting private companies and constructing a fairer competitive environment.

Li said that any reform will hurt certain parties' interests, however the reform needs to be carried out without hesitation to maximize the public's interest.

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