China’s central bank to use ‘precise, forceful’ policy to bolster recovery

A WOMAN walks across the street during morning rush hour in Chaoyang District, Beijing, China Nov. 21, 2022. — REUTERS

BEIJING – China’s central bank said on Wednesday it would step up policy adjustments and implement monetary policy in a “precise and forceful” manner to support an economy whose recovery was improving with “increasing momentum”.

The People’s Bank of China (PBOC) will keep liquidity reasonably ample and maintain stable credit expansion, the bank said in a statement after a quarterly meeting of its monetary policy committee.

“The current external environment is becoming more complex and severe, international economic trade and investment are slowing down, inflation is still high, and interest rates in developed countries remain high,” the central bank said.

“The domestic economy continues to recover and improve, with increasing momentum, but it still faces challenges such as insufficient demand.”

“We need to continue to work hard and take advantage of the improving momentum, step up macro policy adjustments, implement the prudent monetary policy in a precise and forceful manner,” the PBOC said.

The wording in the latest comments was consistent with the line taken earlier by the central bank, though the remarks on the economy appeared slightly more positive as the PBOC had said in its April statement that the recovery lacked solid foundations.

The world’s second-largest economy is showing some signs of stabilizing after a flurry of modest policy measures, but the outlook is clouded by a property downturn, aging demographics, high debt and geopolitical tensions.

The central bank will guide banks to lower borrowing costs for companies and households and support banks to replenish capital, it said.

China will step up government investment and policy incentives to spur private investment and promote a recovery in prices from a low level, the central bank said.

The PBOC reaffirmed its stance of keeping the yuan CNY=CFXS stable and preventing the risk of currency overshooting.

The central bank also pledged to promote the healthy and stable development of the property market, implementing policies to lower down payment ratios and mortgages rates for some home buyers.

The central bank will step up its support for the building of public infrastructure for both normal and emergency use in megacities, the transformation of “urban villages“, or underdeveloped areas, and affordable housing, it said.

The cabinet has announced guidelines to boost investment in such areas as part of efforts to support the economy. – Reuters

Jino Nicolas

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