China's Central Bank Chief Pledges 'Forceful' Economic Support

The head of China’s central bank has vowed to create a better economic recovery with more “precise and forceful” policy actions.

Pan Gongsheng, governor of the People’s Bank of China (PBOC), vowed to focus on bolstering domestic demand and neutralizing financial risks.

The central bank would also guide financial institutions to cut real lending rates and financing costs for firms and individuals, Pan said, in the report published on the bank’s website on Saturday.

The report is significant because it is the first time the governor has commented on policy after the publication of third-quarter economic data. It outlines the authorities’ near-term priorities and was delivered to the country’s parliament.

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Pan said efforts would be made to activate the capital markets and boost investor confidence.

He also pledged to “implement macro policy adjustments in response to the changes in the economic situation, effectively strengthen financial supervision, focus on expanding domestic demand, boosting confidence and preventing risks, and promote a sustained recovery in the economy.”

China’s economy grew at a faster-than-expected rate in the third quarter, while consumption and industrial activity in September also surprised on the upside, suggesting a recent flurry of policy measures is helping bolster a tentative recovery.

Wants stable currency, easing of debt risks

The country will keep yuan stable, prevent the risk of abnormal fluctuations in cross-border fund flows and maintain the stability in the foreign exchange market, Pan said.

It will steadily push forward its yuan internationalisation scheme, establish a risk warning and control system for overseas investment and safeguard the country’s foreign currency assets, he added.

It will also guide financial institutions to help resolve local government debt risks, including debt risks of local government financing vehicles, he said.

Pan also said in the report China would resolve the default risk of bonds of big real estate enterprises, preventing risk contagion in stock, bond and foreign exchange markets, and ensuring the stable operation of financial markets.