Date
25 September 2017
Vincent Chan says a mere cut in interest rates is not enough to counter deflationary risks. Photo: HKEJ
Vincent Chan says a mere cut in interest rates is not enough to counter deflationary risks. Photo: HKEJ

Beijing may ease monetary grip amid lackluster lending

China may decide whether to ease monetary policy amid slowing demand for loans, the Hong Kong Economic Journal reported Monday.

Last month, the central bank cut benchmark interest rates for the first time in more than two years but said its policy stance had not changed.

However, it’s doubtful a single round of rate cut can spur lending, the report said, citing Vincent Chan, managing director and head of China research for Credit Suisse Group A.G.

“A mere cut in interest rates is not enough to counter deflationary risks,” Chan said. “It takes reform to create new economic drivers for economic growth.”

Chan said it will take a large fall in the renminbi to boost the competitiveness of Chinese exports.

Beijing may decide to adjust its monetary policy during the annual Central Economic Work Conference scheduled for this month.

The meeting comes as investment is beginning to slow and state-owned enterprises are reluctant to spend on new capacity.

Chan expects policymakers to set a growth target of 7 percent to 7.5 percent for next year. 

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VW/JP/RA

Freelance journalist

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