Experts doubt need for exit strategy for stimulus package

China's strong economic rebound has raised doubts from experts over whether an exit strategy is needed for the huge economic stimulus package. Elsewhere in the world, Australia has raised interest rates twice while India, Norway and other countries have began to rein in economic stimulus policies. But as CCTV reporter finds out, China appears likely to stick with its proactive fiscal and moderately easy monetary policies.

China adopted a proactive fiscal policy to rebound from the economic recession. Since then, the country's economic recovery has been firmly on track. A senior expert from the Ministry of Finance said the fiscal policy may require fine-tuning, provided it did not to disrupt the economic recovery.

Jia Kang, Director of Fiscal Science Research Inst., MOF said "Currently we cannot change the basic framework of the proactive fiscal policy. We should continue to maintain the active fiscal policy framework. However, some of its content can be fine tuned. But it should be conducted by good timing."

The expert points out certain industries, including real estate, are likely to see policy adjustments. However, an exit strategy for economic stimulus policies is still not in sight.

Jia Kang, Director of Fiscal Science Research Inst., MOF said "If we really need to change the policy and its framework, the focus should be on phasing it out. However, it is too early to talk about an exit."

China's economic recovery has been strong. October saw retail sales jump 16.2 percent, urban fixed asset investment soared 33.1 percent and industrial output grew 16.1 percent. Some economic indices even neared their levels before the financial crisis. Despite the encouraging growth, China's National Bureau of Statistics warned these figures should be taken rationally and stressed economic policy should remain stable.

Yao Jingyuan, Chief Economist of National Bureau of Statistics said "We should not be blindly optimistic about these figures -- including the 16.1 percent growth in industrial output -- because the growth rate is year-on-year. Last October China's industrial output growth slowed sharply. This October we saw 16.1 percent growth. The strong growth rate is likely to continue in the fourth quarter and first quarter next year, because it is on a year-on-year growth basis."

China's Central Bank also made it clear that it will stick to moderately easy monetary policy. Credit shrank in October mainly due to seasonal factors, but next year's new RMB loans are still likely to hit 8 to 9 trillion yuan.