China will look to maintain “positive” interest rates whilst keeping economic growth within a reasonable range, its central bank governor said.
China is in a position to stick to a “normal” monetary policy and maintain growth of the economy, People’s Bank of China Governor Yi Gang wrote in a 20th Communist Party congress report.
“China will [use] monetary policy to step up targeted support for key and weak sectors,” he said.
The world’s second-biggest economy slowed this year, weighed by strict Covid-19 restrictions, a deepening property crisis and weakening demand.
Weakened Yuan
China’s yuan has also weakened in recent months, driven by a stronger dollar, which has been propped up by rapid Federal Reserve tightening, widening interest rate differentials between the world’s two largest economies and an economic slowdown.
In response to the slowing economy, China’s financial and banking regulatory officials also vowed to rein in financial risks and deleverage the economy.
Guo Shuqing, chairman of the China Banking and Insurance Regulatory Commission, wrote China will let failed financial enterprises withdraw from the market at minimum cost, to safeguard the interests of the people.
Unpredictable Future
“China’s development has entered a period in which strategic opportunities and risks and challenges co-exist, and uncertain and unpredictable factors are increasing,” wrote Guo.
“All kinds of ‘black swans’ and ‘grey rhinos’ events may occur at any time.”
Liu Kun, China’s finance minister, also wrote that the country aims to keep the scale of local government debt and the fiscal deficit at reasonable levels, and would curb increases in hidden debt.
Guo said removing “rotten apples” quickly and disposing of problematic financial institutions was necessary.
- Reuters, with additional editing from Alfie Habershon
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