(Yicai) Oct. 30 -- China should focus on immediate measures to stabilize the economy without fixating on a proposed CNY10 trillion (USD1.4 trillion) stimulus figure, a former senior government advisor clarified, addressing speculation sparked by his previous speech.

The primary goal of the speech, delivered a month ago at a forum, was to emphasize the "necessity of short-term stimulus measures to stabilize the economy," rather than getting caught up on the number "CNY10 trillion," said Liu Shijin, former deputy director of the Development Research Center of the State Council, during a forum organized by Tsinghua University yesterday.

Liu had earlier proposed raising funds primarily through the issuance of ultra-long-term treasury bonds to create a stimulus package of no less than CNY10 trillion within two years to reinvigorate economic momentum.

Incentives come with costs, Liu said yesterday. A comprehensive package would combine stimulus with reforms, involving investments in new systems and establishing essential institutional and policy frameworks for sustainable economic and social development in the medium to long term, he explained.

The main challenge facing the macro economy is mounting pressure from declining demand, per Liu. Recent data has shown notable slowing or contraction in key indicators such as consumption, employment, and fiscal health, he added.

Commenting on current consumption-boosting strategies, Liu stated that methods like consumption subsidies can spur short-term growth, but these measures fall short for urban low-income groups, largely migrant workers, who grapple with housing, education, healthcare, social security, and retirement issues.

Insufficient domestic demand is directly related to structural factors because demand is linked to income levels, Liu pointed out. Currently, China has over 900 million low-income individuals, and the share of the middle-income group remains relatively small, constraining growth potential, he added.

To offset this, Liu suggested accelerating urbanization and bridging the gap in basic public services between urban and rural residents. He proposed aiming to double the middle-income group to 800 million or 900 million people within a decade, which could sustain moderate growth and counter the impact of limited demand on economic growth.

Editor: Emmi Laine