Date
21 April 2019
Ning Jizhe, head of the National Bureau of Statistics, said the slowing economy has shown some signs of stabilization over the past two months. Photo: Bloomberg
Ning Jizhe, head of the National Bureau of Statistics, said the slowing economy has shown some signs of stabilization over the past two months. Photo: Bloomberg

China has ample room for policy support: statistics bureau chief

China has ample room for macro policy support, Ning Jizhe, head of the National Bureau of Statistics said on Monday, after the world’s second-largest economy grew at the slowest pace since the global financial crisis in the fourth quarter of 2018, Reuters reports.

China has confidence and the capacity to achieve reasonable growth this year, Ning said, adding that the slowing economy has shown some signs of stabilization over the past two months.

Ning said that while the China-US trade war has affected China’s economy, the impact on growth is manageable.

China’s economic growth cooled slightly in the fourth quarter from a year earlier as expected, weighed down by weak investment and faltering consumer confidence as Washington piled on trade pressure, leaving 2018 growth the weakest in 28 years.

Meanwhile, a central bank official said encouraging banks to actively increase support for the real economy, rather than relying on authorities’ orders to boost lending, is the key to improving the supply of credit in the economy.

Problems with timely capital replenishment, bank liquidity gaps and poor rate “transmission” are three major constraints on banks’ supply of credit, Sun Guofeng, head of the People’s Bank of China’s monetary policy department, wrote in a commentary in the PBOC’s China Finance magazine.

Sun said the PBoC is taking steps to relieve constraints on credit availability in an attempt to ensure looser monetary policy is reflected in looser credit conditions. 

“If capital is not replenished in a timely manner it can restrict reasonable credit availability for the next stage” of lending, he wrote. He said the PBoC is further accelerating the push for banks to issue perpetual bonds to replenish capital.

Sun said “changes in the foreign exchange situation” meant that some banks face large mid-and long-term liquidity constraints, and banks’ practice of using deposits to determine the size of new loans also restricts new credit.

The central bank is using a range of measures, including targeted reserve requirement cuts and the targeted medium-term loan facility, to encourage banks to lend to smaller companies, he said. 

Cash injections by the PBoC ahead of the Lunar New Year holiday have “accurately ensured overall liquidity”, he added.

Demand for bank credit is also held back by poor rate transmission, Sun said, noting that the central bank continues to publish benchmark deposit and loan rates that are not in line with partially liberalized market rates. 

The PBoC will promote market-based interest rate reforms and gradually unify two interest rate “tracks”, Sun wrote

Chinese authorities have struggled to boost lending to try to boost China’s slowing economy, which has been hit by weak domestic demand and the trade war with the US. 

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CG

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