China’s economy is set for a long period of deleveraging and eliminating excess capacity, and the key will be to ensure a stable monetary and financial environment, the People’s Bank of China (PBoC) said Tuesday in its quarterly monetary report.
Property and local government debt issues are becoming more acute, it said. And small and medium-sized companies will continue to grapple with limited access to financing because most financial resources have been channeled into sectors like real estate.
The central bank said emerging economies face various uncertainties, including capital outflow and rising long-term interest rates, and the central government has an arduous task to restructure the foundations of economic growth.
It said the basis for stable consumer prices is not solid, because labor, rent and services costs continue to rise strongly. Property prices in first-tier cities posted sharp gains, which will likely push up rents and have ripple effects in other sectors, it said.
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