Key facts
- China's central bank identified a structural mismatch between strong supply and weak demand.
- The People's Bank of China pledged to maintain an accommodative monetary policy.
- The central bank will increase financial support to revive domestic consumption.
- PBOC aims to guide policy interest rates and encourage price rebounds.
- China will maintain the yuan's stability at a reasonable and balanced level.
- PBOC Governor Pan Gongsheng reiterated a moderately loose monetary policy stance.
China's economy is facing a structural imbalance characterized by strong supply and weak demand, compounded by external shocks, according to the People's Bank of China (PBOC). In response, the central bank has pledged to maintain an appropriately loose monetary policy and increase financial support to stimulate domestic consumption and investment.
The PBOC stated that while the economy remains generally stable and improving, these challenges necessitate a supportive stance. The bank intends to strengthen guidance on policy interest rates, encourage a rebound in prices, and ensure the yuan remains stable at a reasonable and balanced level. Governor Pan Gongsheng has emphasized the accommodative nature of China's social financing conditions and the use of various monetary policy tools to maintain ample liquidity and lower overall financing costs.
Pan also highlighted that China has no intention of devaluing its currency for trade advantages and has seen positive progress in the internationalization of the renminbi. He further stressed the importance of steadily promoting high-level opening up of the financial sector and welcomed overseas investors to participate in China's financial markets.