As China announced the appointment of a new finance minister on Monday, analysts said major fiscal policies will not change and the country can use more policy tools to help anchor its economic growth.
Xiao Jie, a former tax chief and deputy finance minister, is the new minister, according to a decision passed at a bimonthly meeting of the Standing Committee of the National People’s Congress, the country’s top legislature.
Xiao, 59, who is currently deputy secretary-general of the State Council, worked in the Ministry of Finance from 1982 until 2005. He was head of the State Administration of Taxation from 2007 to 2013.
His predecessor, Lou Jiwei, was finance minister since 2013. It was not disclosed why Lou was replaced, but it is generally believed that it is because Lou, nearly 66, has passed the conventional retirement age for ministerial-level officials, which is 65.
Lou is known for pushing China’s fiscal reforms, a task that includes putting the issuance of new debt by local governments under strict control to prevent any financial risks from derailing the growth of the world’s second-largest economy.
Monday’s legislative meeting also decided on the replacement of State Security Minister Geng Huichang, 65, with Chen Wenqing, 56, and Civil Affairs Minister Li Liguo, 63, with Huang Shuxian, 62.
Both Chen and Huang have long experience with the Central Commission for Discipline Inspection, the Communist Party of China’s internal anti-corruption watchdog. It was not disclosed whether there would be any further arrangement for Li.
Analysts said Monday’s Finance Ministry reshuffle will not have a major impact on China’s fiscal policies, such as reform of the property tax. Lou has repeatedly said that China is actively pushing reforms on property-related taxes, including the tax on holding property.
“Such reforms have been decided by the central authorities and will not be changed by replacement of the minister,” said Liang Haiming, chief economist of China Silk Road iValley Research Institute. “The new minister will also make efforts to push the property tax reforms, since it is a task that China must accomplish.”
Following Xiao’s appointment, China may use more fiscal means to help generate growth, Liang said.
“I believe Xiao as the new minister (of finance) will take bolder fiscal measures to stimulate economic growth,” Liang said. “The world has realized that simply using monetary policy has failed to keep the world economy going and fiscal policy will be allowed to play a larger role.”
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(Via: NewsGhana)
