Date
18 November 2018
China’s structural deleveraging campaign has begun yielding results, according to the People's Bank of China. Photo: Reuters
China’s structural deleveraging campaign has begun yielding results, according to the People's Bank of China. Photo: Reuters

PBoC vows forward-looking and flexible policy to support growth

The People’s Bank of China (PBoC) said on Tuesday that it will not resort to strong stimulus to support the economy but will keep liquidity reasonably ample and offer more help to companies which are having trouble obtaining financing.

Officials also reiterated that China will not use the yuan as a weapon to deal with trade frictions, Reuters reports, a day after US President Donald Trump accused Beijing of manipulating its currency in response to US tariffs on Chinese goods.

Policies will be made more forward looking, flexible and effective, China’s central bank said in a statement issued at a briefing in Beijing.

The news conference came after a spate of weaker readings from China’s economy in recent months, a sharp drop in the yuan against the dollar and a plunge in Chinese stock markets.

“For companies facing temporary difficulties, we encourage financial institutions not to cut off loans,” Ji Zhihong, the head of the PBoC’s financial markets department, was quoted as saying when asked about support measures for exporters impacted by rising trade protectionism.

“If the product has a market or future, we support banks to provide reasonable support,” he said.

The PBoC said it will “effectively ease” companies’ financing problems and improve coordination with other agencies to ensure monetary policy measures are passing through to the broader economy.

PBoC Vice Governor Zhu Hexin, however, told the briefing that authorities will stay the course in their multi-year campaign to reduce risks in the financial system.

“The direction of structural deleveraging won’t change,” said Zhu.

The campaign is already paying dividends, with the macro-economic leverage ratio stabilizing and growth in the household debt ratio slowing, the official added.

“The effectiveness of deleveraging needs to be improved. It’s the bad, inefficient leverage that needs to be gotten rid of. Some departments with high efficient leveraging can still add more debt.”

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RC

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