People's Bank of China Governor: "Will Balance Economic Growth and Risk Management"

"Stable Leverage Ratio in China" Emphasized
People's Bank of China Holds Benchmark Interest Rate Steady for 11 Consecutive Months

[Image source=Reuters Yonhap News]

[Asia Economy Beijing=Special Correspondent Jo Young-shin] Yi Gang, Governor of the People's Bank of China, stated that China's future monetary policy direction will strike a balance between supporting economic growth and managing risks. As the Chinese economy is moving away from the risks of COVID-19 and heading toward normalization, it is interpreted that large-scale liquidity supply-type monetary policies will be avoided. It can also be understood to mean that monetary policy will focus on debt management and supply liquidity selectively and selectively if necessary.

According to Chinese media such as China News Network, Pengpai, and Caixin on the 22nd, Governor Yi attended the China Development Forum held the day before and said that monetary policy will be managed based on stability, continuity, and sustainability, emphasizing that stability is the top priority of monetary policy.

Governor Yi emphasized, "Future monetary policy should pay attention to the overall volume and the entire economic structure," adding, "Support for key and vulnerable areas will be strengthened." He stressed that "China's leverage ratio (total debt to GDP ratio) is currently stable" and explained that monetary policy will balance between supporting economic growth and risk prevention policies. Earlier, Premier Li Keqiang also stated in the National People's Congress (NPC) work report that "the total debt ratio will be maintained stably (deleveraging)."

Governor Yi said, "Currently, China's total money supply (M2) growth rate is around 10% year-on-year, which almost matches the nominal GDP growth rate," adding, "Considering the Consumer Price Index (CPI) and others, China's monetary policy is currently normal, and there is room to supply liquidity such as interest rates." He further added, "A 'sound monetary policy' is necessary to create an environment for financial reform and market opening in China."

Meanwhile, on the 20th, the State Council appointed Cai Fang, Vice President of the Chinese Academy of Social Sciences, and Wang Yihong, Vice Chairman of the China Center for International Economic Exchanges, as members of the People's Bank of China Monetary Policy Committee (an advisory and deliberative body). Regarding this, Bloomberg News analyzed that "the newly appointed monetary policy committee members are all scholars who have warned about the increase in China's debt and the risk of asset bubbles," suggesting a possible connection to changes in the monetary policy stance of Chinese financial authorities.

Wang, who attended the China Development Forum, said, "As the Chinese economy gradually normalizes, economic policies there should also normalize," adding, "China will maintain support necessary for economic recovery and will not have a sudden macro policy shift."

On the same day, the People's Bank of China kept the Loan Prime Rate (LPR), which functions as the benchmark interest rate, unchanged for the 11th consecutive month. The one-year LPR was lowered from 4.05% in April last year to 3.85% and has been frozen for 11 consecutive months.

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