PBoC calls for debt and stimulus control
(24 September 2019 – China) China must avoid massive stimulus, keep debt levels sustainable and maintain a prudent monetary policy footing declared People’s Bank of China (PBoC) central bank Governor Yi Gang.
China is struggling with maintaining economic growth, on pace for the slowest expansion in almost thirty years with industrial production in August rising at the slowest single month pace since 2002, exports contracting and a producer prices index (PPI) falling deeper into deflation.
Those combined factors have placed pressure on policy makers to do more to support the economy amid the risk of higher tariffs in the trade war with the US and slowing global growth. The PBoC cut the value of reserve cash Chinese banks must hold this month to the lowest level since 2007, however it is still holding off on cutting borrowing costs more broadly. Analysts are calling for stronger easing signals after a new gauge of borrowing costs was only slightly lowered.
“Overall financial risks are contained and risks in the shadow banking sector and some key institutions have been resolved” Governor Yi Gang stated.
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