Look past China’s short-term cash squeeze to better quality growth, central bank official says

  • China’s central bank will “largely” stay on its neutral and prudent monetary course given the overall good state of the country’s economy, its assistant governor said on 5 Dec 17.
  • The People’s Bank of China (PBOC) would also continue to try to direct capital towards the real economy rather than speculation, Liu Guoqiang said on the sidelines of the World Internet Conference in Wuzhen, Zhejiang province.
  • China has also kept capital flows under control and its exports have remained healthy, despite two interest rate rises by the US Federal Reserve in 2017 and the US’ planned tax cuts.
  • Liu said the specific growth figures were increasingly being played down and the overall tone was to make progress while ensuring stability.
  • Nevertheless, most financial institutions and economists say the administration will aim for growth of “around 6.5%” for 2018, compared to “6.5% or higher if possible” for 2017.
  • At the same time, domestic interbank rates are on the march with the central bank’s refusal to pump more money into the market in its push to minimise risks from speculation.
  • “Some financial institutions face a cash squeeze in the short term,” Liu said. “The real economy is barely affected. And, after some time’ that capital will be guided to the real economy from the financial market to improve the economy’s development.”
  • Liu said the various financial risk control measures would help guide market expectations.

External Link : http://www.scmp.com/news/china/economy/article/2122900/look-past-chinas-short-term-cash-squeeze-better-quality-growth