Chinese government is creating an ‘island of stability’: expert

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03:28

Chinese policymakers are seeking to create an “island of stability” to stimulate the domestic economy as well as promoting the development of the global community, according to Andy Mok, a non-resident fellow at the Center for China and Globalization.

“When we are talking about equity market or real economy, the expectation of investors, businesses and consumers is very important because it affects behaviors. One of the biggest issues globally today is the total chaos in the international system,” Mok said.

“So I think what the Chinese government is doing is creating an ‘island of stability,' meaning that there is more predictability and certainty in China, which is good for the domestic economy – all of the players domestically, but also is good for broader global communities.”

Andy Mok, a non-resident fellow at the Center for China and Globalization, talks in a studio interview with Global Business. /CGTN Photo

Policy tools are key to bolstering economic expectations, in his opinion. “I think one of the most important things China is doing is to put aside the fiscal measures to increase the deficit. Thereby it's creating domestic demand. Then it moves to monetary policy to create more liquidity,” he explained.

And Chinese policymakers have several options at its disposal. The government will continue to cut taxes and speed up the issuance of local government bonds as part of its fiscal policy. On the monetary policy front, analysts say that there's still ample room for the central bank to again cut the reserve ratio requirement.

“The Chinese government has been remarkably consistent since the beginning of reform and opening-up…... the business community around the world has a lot of confidence in China,” Mok said.