Governor: PBC intensifies countercyclical adjustments to consolidate economic recovery

A view of the PBC headquarters in Beijing. Photo: cnsphoto

The People's Bank of China (PBC), the country's central bank, will maintain a supportive monetary policy and intensify countercyclical and cyclical adjustments to stabilize expectations and boost confidence, helping to consolidate the trend of economic recovery, said PBC Governor Pan Gongsheng.

The central bank will implement prudent monetary policy in a precise and effective manner, strengthen adjustments and push forward the implementation of fiscal policies to achieve impact. At the same time, it will strive to keep liquidity in the banking system adequate and abundant, maintain appropriate credit growth and reduce financing costs for businesses and consumers, Pan said in an interview with China Central Television on Saturday.

Pan said the central bank will encourage financial institutions to increase lending in key areas and weak linkages and more specifically meet consumers' reasonable financing needs.

Overall, China's financial system is stable, said Pan. After the third plenary session of the 20th Central Committee of the Communist Party of China, the basic principle that there is no systemic financial risk is being seriously pursued, the governor stressed.

The central financial work conference held in October stressed that the financial sector must provide high-quality services for economic and social development. We must ensure that the financial sector plays an active role in promoting the high-quality development of the real economy, Wan Zhe, an economist and professor at the Belt and Road School of Beijing Normal University, told the Global Times on Sunday.

China will expand the participation of the domestic financial market by attracting more foreign institutions and investors, optimizing financial supply and promoting the continuous improvement of the efficiency of resource allocation in the financial market, Wan said.

She said efforts are needed to advance China's financial opening-up in terms of rules, management, standards and other aspects, so as to improve the international competitiveness of China's financial industry.

Since the beginning of the second half of the year, the PBC has tightened its monetary policy as policymakers stressed the need for the country to remain firmly committed to achieving this year's economic and social development goals.

On Tuesday, the PBC announced plans to increase the quota for distributing aid by 100 billion yuan ($13.96 billion) for the agricultural sector and small businesses in 12 flood-hit provinces, including Chongqing municipality in southwest China, Fujian in eastern China and Guangdong in southern China.

In order to achieve the GDP growth target of around five percent for this year, macroeconomic measures would have to be intensified, analysts said.

Given the trend of interest rate cuts in major economies, it is expected that the PBC may announce a cut in interest rates or reserve requirements by the end of 2024, Wen Bin, chief economist at China Minsheng Bank, told the Global Times.

Thanks to favourable factors such as the low interest rate environment, a stable real estate market and consumption-promoting measures, consumers' willingness to spend and borrow will gradually recover, he said.

In addition, policymakers should step up fiscal policies to ensure effective asset supply, encourage companies to increase leverage, and revive business confidence through further reforms and greater opening-up, Wen said.