China

China Central Bank Vows to Rein in Stimulus as Economy Recovers

The world's second-largest economy is stabilising and improving but still faces many challenges, Premier Li Keqiang said.

China’s central bank has pledged to take a light-touch approach, avoiding a “flood” of stimulus, as it predicts a steady economic recovery for the country throughout the rest of the year.

In its quarterly policy implementation report released on Friday, the People’s Bank of China (PBOC) said its monetary policy will be precise and forceful and will focus on supporting domestic demand expansion and stabilising economic growth and prices. It will avoid “flood-like” support, it promised.

However, it admitted that the external environment remains “severe and complex”, adding the basics of domestic economic recovery are “not solid”.

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The report also said that the property sector requires time to transition while the pressure of balancing local government fiscal revenue and expenditure persists.

China will closely watch the trend and changes in inflation and look to keep the prices of energy and food stable, said the report.

The world’s second-largest economy is stabilising and improving but still faces many challenges, Premier Li Keqiang said at a cabinet meeting on Wednesday, after the country’s economic growth slowed to one of the worst levels in half a decade due to stringent Covid-19 lockdowns and curbs in 2022.

The PBOC will keep liquidity reasonably ample and maintain effective credit growth, according to the report.

The central bank also pledged to start improving social expectations and boosting confidence, mainly focusing on stabilising economic growth, employment and prices.

As the problematic property sector has showed a tentative recovery, the PBOC said it will satisfy reasonable financing demand in the sector but insist on not using real estate as a short-term means to stimulate the economy.

Reuters with additional editing by Sean O’Meara

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Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.