China Officially Prepares to Inject Funds... "Real Economy, Credit Support Must Be Strengthened"

[Asia Economy Reporter Naju-seok] The People's Bank of China, the central bank, has indicated that it is preparing to actively inject funds in response to the economic impact caused by the novel coronavirus infection (COVID-19). The People's Bank of China expressed that an increase in the total debt ratio is inevitable, clearly signaling a monetary policy easing stance.

According to the state-run Financial News on the 13th, a representative of the People's Bank of China explained, "Due to the shock impact of COVID-19, China's total debt ratio rose in the first quarter of this year," adding, "This is a result that appeared in the process of helping the recovery of the real economy through economic adjustment policies." He stated, "It is appropriate to tolerate a gradual increase in the total debt ratio to strengthen credit support targeting the real economy," and "This will create conditions to maintain a more reasonable total debt ratio in the future."

This suggests that the Chinese government, which had emphasized debt control until now, will change its policy direction 180 degrees in the situation of COVID-19.

Earlier, in the '2020 First Quarter Monetary Policy Implementation Report,' expressions related to liquidity supply that appeared in previous reports disappeared, attracting attention.

In the '2019 Fourth Quarter Monetary Policy Implementation Report' announced in February this year, the People's Bank of China used the phrase "maintain economic operation within a reasonable range without 大水漫灌 (Da Shui Man Guan - literally 'flooding with water' meaning massive liquidity injection)." Until now, the Chinese government had indicated that it would not adopt a strategy of supplying liquidity to stimulate the economy.

However, in the first quarter monetary policy implementation report this year, such expressions disappeared. Instead, phrases like "As global uncertainty increases, support will be provided to make the recovery of the real economy more prominent and maintain liquidity reasonably and abundantly" appeared.

This content was produced with the assistance of AI translation services.