MNI POLICY: Limited Scope For More China Stimulus: Ex-Minister

     BEIJING (MNI) - Chinese government attempts to buoy growth with additional

fiscal stimulus are constrained by the poor shape of many state-owned

enterprises, which will struggle to provide funds for public spending

programmes, a former finance minister told reporters on Wednesday.

     The government on Tuesday said it would expand its fiscal deficit to 2.8%

of gross domestic product from 2.6% in 2018, and would seek a greater share of

profits from some financial institutions and SOEs. Some advisors had called for

it to boost spending over 3%, but the government said it wanted to "leave policy

room for possible future risks."

     Lou Jiwei, a former finance minister, noted that some SOEs are struggling

and will be hard-pushed to provide funds enabling the government to make

additional cuts to taxes and fees.

     "We need to come up with ways to allocate profits of state-owned companies

and certain financial institutions (to other sectors of the economy)," Lou said,

speaking on the sidelines of national congressional meetings. "But they are also

experiencing much hardship, there would not be much room."

     Neither does the overall shape of the economy allow for any reduction in

fiscal spending, Lou told reporters, although he said that he had advocated the

role of market forces in allocating resources for investment during his tenure

as finance minister from 2013 to 2016, and had opposed the Made in China 2025

policy which aimed at boosting high technology industries.

     In a keynote speech on Tuesday, Premier Li Keqiang omitted any reference to

Made in China 2025, which has been targeted by the U.S. in trade talks.

Washington says the programme relies on unfair subsidies.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

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