People pass by the headquarters of the People’s Bank of China (PBOC), the central bank, in Beijing, China, on September 28, 2018.
Jason Lee | Reuters
BEIJING – China’s central bank policymakers on Tuesday dropped expectations that aggressive measures would be taken to boost economic growth.
“China’s monetary policy remains within a normal range,” said Pan Gongsheng, deputy governor of the People’s Bank of China and head of the state foreign exchange administration.
He added that China would not embark on large-scale flood-like stimuli. According to a CNBC translation of his Chinese comments posted on the central bank’s website.
Shanghai composite material changed little at the end of the trading session on Wednesday morning, after two consecutive days of gains of more than 1% each.
The yield on China’s ten-year government bonds traded close to 2.86%.
Nomura’s chief Chinese economist Ting Lu noted that China’s ten-year government bond yield had risen to 2.87%, passing 2.85% on Tuesday at the end, as markets went up. interpret the additional comments of policymakers “as a sign of less monetary flexibility.”
“Current conditions may not require as much liquidity as before to keep money market interest rates operating stably,” said Sun Guofeng, head of the central bank’s monetary policy, according to a CNBC translation.
Sun added that the central bank has “sufficient tools” to ensure market liquidity.
The central bank of China uses various measures, rather than a primary rate, to implement monetary policy. The PBoC reduced the reserve requirement ratio, the amount that banks must hold in reserve, in July for the first time since April 2020. However, a benchmark interest rate, the main rate of the loan, has been maintained for 16 consecutive months.
Last week, the top executive body, the State Council, said the central bank would release an additional 300 billion yuan ($ 46.5 billion) for banks to lend to small and medium-sized businesses.
“These [central bank] the comments reduce the chances of an imminent and aggressive reduction in policy as the PBoC appears to be comfortable with the current liquidity situation and the level of interest rates, ”said Aidan Yao, a senior Asian economist and AXA Investment Managers.
“Overall, Sun’s comments suggest that the PBoC has not altered its prudent political stance despite the hardened economic winds,” Yao said.
Chinese trade data for August came in much better than expected on Tuesday, with exports up 25.6% and imports, a sign of domestic demand, up 33.1% from the previous year. previous year.
Other economic reports have shown a slowdown in growth in recent months, especially in late July and August, as China battled its largest coronavirus outbreak since the initial onset of the pandemic in early 2020.
Retail sales and other August data will be released on September 15th.
Growth will be under pressure during the third quarter, Xu Hongcai, deputy director of the Economic Policy Commission of the Chinese Political Science Association, said in a telephone interview, according to a CNBC translation of his statements into Mandarin. .
He noted that exports cannot sustain long-term growth and that the economy must depend more on consumption and industrial investment, both of which are lagging behind.
But central banks’ comment reflects the overall stability of the economy, Xu said, and he expects government spending and other fiscal policy measures to play a more important role in stimulating the economy in the coming months. .