People's Bank of China Recovers to Pre-COVID Levels... Concerns Over Export Slowdown in Second Half

Uncertainty Grows Over COVID Resurgence, Existing Monetary Policy Maintained

[Asia Economy Beijing=Special Correspondent Jo Young-shin] The People's Bank of China, the central bank of China, diagnosed that the Chinese economy in the second half of the year is facing challenges such as a slowdown in export growth, sluggish domestic demand recovery, and a decrease in investment in some sectors.

According to Chinese economic media Caixin on the 10th, the People's Bank of China analyzed in the '2021 Q2 Monetary Policy Implementation Report' released the day before that the Chinese economy recovered to pre-COVID-19 levels in the first half of the year.

However, it pointed out that rising international raw material prices are increasing costs for Chinese manufacturing companies, and uncertainties are growing due to the global resurgence of COVID-19. The People's Bank of China expressed concern that such uncertainties could increase downward pressure on economic growth.

The People's Bank of China stated that it will focus monetary policy in the second half of the year on supporting the real economy but reiterated that it will not implement 'Daesu Manguan' (an irrigation method of flooding farmland, meaning quantitative easing).

The People's Bank of China analyzed that the external situation is more severe than the internal one. Although the global economy showed a recovery trend in the first half of the year, it forecasted that the resurgence of COVID-19 would affect the global economic recovery. It also expected the possibility of monetary policy shifts in major advanced countries due to concerns about inflation.

The People's Bank of China also presented its outlook on prices. It forecasted that China's Producer Price Index (PPI) will remain at a high level for the time being due to rising international raw material prices. China's PPI has shown a vertical upward trend every month since last March, rising 9% year-on-year last month. On the other hand, China's Consumer Price Index (CPI) in July increased by only 1% year-on-year. The CPI increase target for China this year is 3%. The People's Bank of China stated that while the PPI will remain high for the time being, the CPI will move stably within an appropriate range.

Huanqiu Shibao interpreted the People's Bank of China report by saying, "So far, the People's Bank of China has maintained a normal monetary policy and will maintain the existing monetary policy in the second half of the year," and "The Chinese economy is not showing signs of inflation or deflation."

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