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China central bank head says policy needs to selectively support growth, curb risks

BEIJING : China’s monetary policy needs to focus on supporting economic growth in a targeted way while also reducing financial risks, the central bank head said.

“Monetary policy needs to strike a balance between supporting economic growth and preventing risks,” People’s Bank of China (PBOC) Governor Yi Gang said in a speech made at a closed-door session at the China Development Forum on Saturday.

“China’s macro leverage ratio is basically stable. We should provide positive incentives for economic entities and restrain the breeding and accumulation of financial risks.”

The comments were published by the PBOC on Sunday.

Yi said China’s monetary policy should focus on targeted support for key areas and weak links in the economy.

Policymakers have pledged to support job-creating small firms that have been hit harder by the coronavirus pandemic.

China’s broad money supply growth of about 10% at present basically matches nominal economic growth, Yi said.

“China’s monetary policy is in a normal range and has room to provide liquidity and appropriate interest rate levels,” Yi said.

The central bank is trying to cool credit growth to help contain debt risks, but is treading warily to avoid hurting the economic recovery, which remains uneven as consumption lags and small firms struggle, policy insiders said.

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