Euronews is no longer accessible on Internet Explorer. This browser is not updated by Microsoft and does not support the last technical evolutions. We encourage you to use another browser, such as Edge, Safari, Google Chrome or Mozilla Firefox.
BREAKING NEWS

China central bank says to step up policy support for economy

China central bank says to step up policy support for economy
FILE PHOTO: People walk past the headquarters of the People's Bank of China (PBOC), the central bank, in Beijing, China September 28, 2018. REUTERS/Jason Lee/File Photo -
Copyright
Jason Lee(Reuters)
Euronews logo
Text size Aa Aa

BEIJING (Reuters) - China's central bank will ratchet up support for the economy by improving its policy transmission mechanism, governor Yi Gang said in remarks published on Wednesday.

Policymakers have pledged to step up support this year, following a raft of measures in 2018 including fast tracking infrastructure projects and cuts in banks' reserve requirements and taxes, amid a trade dispute with the United States.

Data later this month is expected to show China growth slowed to around 6.6 percent in 2018 from 6.9 percent the previous year. Analysts are forecasting a further loss of momentum in coming months before policy support measures begin to kick in.

"The financial support for the real economy has not weakened as economic growth slows. Instead, the support has increased to reflect counter-cyclical adjustments," the official Xinhua news agency quoted Yi as saying.

The People's Bank of China said on Friday it was cutting the amount of cash that banks have to hold as reserves for the fifth time in a year, freeing up $116 billion (£91.1 billion) for new lending as it tries to reduce the risk of a sharp economic slowdown.

The first targeted medium-term lending facility (TMLF) operation will come into operation this month, Yi said.

In December, the central bank rolled out the TMLF to spur lending to small and private firms to support slowing economic growth.

"These measures will help keep liquidity reasonably ample, keep interest rates steady and guide reasonable growth of money and credit," Yi said.

The central bank needs to further improve its monetary policy transmission mechanism from both supply and demand sides, given that financing demand has declined as the economy slows while banks' risk appetite has also fallen, Yi said.

"The key to improving monetary policy transmission mechanism is to establish an incentive mechanism for banks and actively increase support for the real economy," Yi said.

The central bank has recently modified the wording on monetary policy to "prudent with appropriate looseness and tightness" from "prudent and neutral".

China will stick to its structural deleveraging as financial risks exposed earlier have been dealt with in an orderly way, Yi said.

China's financial risks are generally under control while its macro-leverage ratio is basically steady, he said.

Still, regulators will prevent various "black swan incidents", or unforeseen events, and maintain stability in the country's stock market, bond market and foreign exchange markets, he said.

(Reporting by China Monitoring Desk and Kevin Yao; Editing by Simon Cameron-Moore)

euronews provides breaking news articles from reuters as a service to its readers, but does not edit the articles it publishes. Articles appear on euronews.com for a limited time.