It is reported that China exit from economic stimulus remains far away as private investment and consumption are currently unable to shore up the economy.

En route to the G20 finance ministers' meeting in South Korea, Canadian Finance Minister Mr James Flaherty said economies across the globe should start withdrawing stimulus measures. But many Chinese economists do not agree.

Mr Jia Kang director of the Institute of Research at the Ministry of Finance said that the nation should not consider any specific measures to end the stimulus until the private sector gets stronger. He said that "Currently China economic growth still relies on policy boosts, but public investment mainly supported by the government is far from enough if we wish to have a steadily expanding economy."

He called for immediate measures to stimulate private investment and consumption. He said that "Now China must pay more attention to encouraging private investment."

Mr Dong Xian'an chief economist at Industrial Securities said that domestic consumption could only become a reliable pillar of the Chinese economy once substantial improvements were made to social welfare and affordable housing.

Analysts said the tightening policies targeted at the real estate sector since April may accelerate the decline in fixed asset investment and add an element of uncertainty to the country's economic growth until the private sector plays a more significant role.

In May, China manufacturing index dropped 1.8 points to 53.9 from 55.7 in April after investment growth mainly spurred by government investment, shrank 4.4 percentage points from January to April compared with the same period last year.

Mr Lu Zhengwei, the senior economist of Industrial Bank Co Ltd said the figure shows that private investment needs a further boost.

Mr Zhou Mingjian an analyst with Pacific Securities, referring to a document released on May 13th to encourage private investment in fields such as infrastructure, healthcare and education "The decision makers are in a dilemma now. To solve the problem, the State Council has called for the opening of more areas of the economy to private capital."

Since the entrance of private capital would erode the influence of some monopoly groups, opposition would be very strong if there were no further detailed regulations.

(Sourced from China Daily)