China’s central bank pledged to strike a balance between supporting growth and preventing inflation risks this year, as the economic rebound from three years of Covid damage gathers pace.
(Bloomberg) — China’s central bank pledged to strike a balance between supporting growth and preventing inflation risks this year, as the economic rebound from three years of Covid damage gathers pace.
The People’s Bank of China will provide “sustainable” support for the real economy and refrain from using “flood-style” stimulus, it said in its quarterly monetary policy report released late Friday. While inflation is expected to remain mild overall, it’s still necessary to look out for potential rising price pressures in the future, it said.
Separately, Premier Li Keqiang said the nation’s economy is rebounding, but still facing risks and challenges. He made the comments at a seminar with the finance ministry and the nation’s economic planner on Thursday, state TV reported.
Economic activity looked to be picking up in February as many residents returned to work after the Lunar New Year break, clogging roads in major cities and spending more at restaurants and shops. Meanwhile, the government removed all movement curbs and declared the pandemic basically over, providing a spur to consumption and travel.
The PBOC reiterated that monetary policy will be targeted and forceful, with a focus on on stabilizing growth, employment and prices, as well as expanding domestic demand. The monetary authority will strive to maintain effective growth of total credit, and keep growth of money supply and total social financing basically in line with the nominal economic growth rate, according to the report.
China’s top leadership is set to convene in March at the National People’s Congress to lay out the economic blueprint for this year. Most market watchers expect Beijing to reaffirm its pro-growth stance and unveil details on how it plans to boost market confidence and expand domestic demand.
He Lifeng — who is expected to replace Liu He as China’s vice premier responsible for economic policy in a government reshuffle next month — is being considered for the role of party secretary at the PBOC, the Wall Street Journal reported. Veteran banker Zhu Hexin, currently chairman of state-owned financial conglomerate Citic Group Corp., is being considered as the next central bank governor, according to a person familiar with the matter.
The world’s second-biggest economy is expected to rebound overall this year, although the foundation for a recovery isn’t yet solid and the external environment is still severe and complex, the central bank said.
The nation’s economy will likely expand 5.2% this year, according to the median estimate in a Bloomberg survey of economists, following a 3% increase in 2022, the second slowest pace since the 1970s.
–With assistance from Yujing Liu.
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