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China’s central bank continues to put a brake on economic stimulus

People pass 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 pushed back expectations on Tuesday that they would take proactive steps to boost economic growth.

“China’s monetary policy remains within normal limits,” said Pan Gong-shen, Lieutenant Governor of the People’s Bank of China and director of the State Foreign Exchange Administration.

He added that China would not embark on a massive flood-like stimulus. This is due to the CNBC translation of his Chinese remarks published on the Central Bank’s website.

At the end of Wednesday morning’s trading session, the Shanghai Composite Index remained largely unchanged after two consecutive days of rise, each exceeding 1%.

Yields on 10-year Chinese government bonds traded close to 2.86%.

China’s 10-year Treasury yield yields from 2.85% to 2.87% late Tuesday, as Nomura’s chief China economist Tin Lu interpreted the market’s comments from additional policy makers as “signs of easing monetary easing.” Said that it had risen to.

According to CNBC’s translation, central bank monetary policy director Sun Guofeng said, “In the current situation, it may not require as much liquidity as it used to to maintain stable interest rates in money markets. There is. “

Sun added that central banks have “enough tools” to ensure market liquidity.

Central banks in China use a variety of means to implement monetary policy, rather than primary interest rates. For the first time since April 2020, the PBoC lowered the ratio of reserve deposits that banks need to hold reserves in July.However, it is a benchmark interest rate Loan prime rate remains the same for 16 months..

Last week, the state legislature, the highest executive branch, announced that the central bank would release an additional 300 billion yuan ($ 46.5 billion) to finance small businesses.

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“They are [central bank] In a statement, AXA Investment Manager’s senior emerging Asian economist Aidan Yao commented on the imminent aggressive policy easing given that the PBoC appears to be reassured by current liquidity conditions and interest rate levels. Reduce the chances. “

“Overall, Sun’s comments suggest that the People’s Bank of China has not changed its cautious policy stance, despite growing economic headwinds,” Yao said.

August China trade data came in Much better than expected On Tuesday, exports surged 25.6% and imports (a sign of domestic demand) rose 33.1% from a year ago.

Other economic reports have shown that growth has slowed in the past few months, especially in late July and August, as China has fought the largest outbreak of the coronavirus since the first outbreak of the pandemic in early 2020. I am.

August retail sales and other data will be released on September 15th.

Xu Hongcai, deputy director of the Economic Policy Committee of the China Policy Science Association, said in a telephone interview that CNBC’s translation of the Chinese statement would put pressure on growth in the third quarter.

He said exports could not sustain growth in the long run and the economy needed to be more dependent on consumption and industrial investment, both lagging behind.

However, central bank commentary reflects the overall stability of the economy, Xu said, saying government spending and other fiscal policy measures will play a greater role in stimulating the economy in the coming months. Expect.

China’s central bank continues to put a brake on economic stimulus

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