China has offered to reduce the government debt and close the idle plants

Almaty. February 24. Silkroadnews - China get prepared the reform to be implemented under the leadership of President Xi Jinping.
“If we miss the window of opportunity to push through the structural reforms, we would suffer severe consequences,” - said Yang Weimin, a deputy director of the Office of the Central Leading Group for Financial and Economic Affairs.
Mr. Yang also said the next two years are crucial in reducing debt and closing “zombie” businesses and factories churning out unneeded goods and suggested to make a more balanced economic model: less focus on cheap exports and investment and more on consumption and services.
Government analyzes the situation on the unprofitable enterprises, in particular, they will not be given the government subsidies and bank loans, said Yang Weimin
However, Societe Generale CIB economist Klaus Baader the decline in this sector will result in a sharp deterioration in the labor market. Many Chinese officials remind of the reforms by the Premier Zhu Rongji: that time reducing the bloated state sector led to the cut of about 40 million job places and the closure of 60 thousand companies. In his turn, the deputy chairman of the People’s Bank of China (PBOC) Yi Gang doubt that Beijing will close factories in large quantities, it is important to consider the impact of the reform on the employment level.
China should avoid an overabundance of credit and reduce the national debt, said Gang. It is the PBOC and the Ministry of Finance that shall stimulate demand and consumption, using the measures of monetary and fiscal policies, the chairman of the bank Zhou Xiaochuan stated. For example, to increase the demand for housing, we shall reduce the taxes, Gang believes.
As pointed out by economist for the Development Research Center Xin Bin, a key problem is the growth of debt and falling stock market. At the end of 2015 the Chinese debt amounted to 260% of GDP, and in 2007 it grew by almost 100%, according to the UBS Group analysts. Its service costs make about 20% of GDP, the analysts of the Bank for International Settlements say. The state companies’ profits decreased year-on-year in January-November 2015 to 9.5%, with their debt growth of 18.2%, according to BMI Research study.
Statements by the Chinese officials disconcert the international investors. For example, a record surge in bank lending observed in January is clearly contradicts to the government statements. Beijing shall clearly declare its intentions, IMF Managing Director Christine Lagarde and US Treasury Secretary Jack Lew say.