China’s central bank said on Wednesday it would step up the implementation of its prudent monetary policy in order to support the macro economy.
The People’s Bank of China (PBOC) said following its first-quarter monetary policy committee meeting that it would “protect the legal interests of home buyers and promote healthy development of the country’s property market”.
China’s largest banks have said the country’s lenders face multiple headwinds this year that include the pandemic, global politics and domestic turmoil in the real estate industry.
China has seen a Covid-19 resurgence since early March, booking a new high regarding the number of provinces affected.
“Chinese consumers and businesses will no doubt be looking for policy support, but so far, few concrete signs have emerged about the form this will take,” Heron Lim, an economist at Moody’s Analytics, said.
“We expect the People’s Bank of China to cut rates as soon as possible given the downside risks, and China should provide fiscal support if it is to keep the 5.5% gross domestic product growth target for 2022 alive.”
Due to stringent local Covid-19 containment measures, intra-city and cross-regional movement of people has declined, dampening spending.
“Considering headwinds from Covid-19 conditions, we estimate China’s first-quarter year-on-year GDP growth at about 5%,” Duan Yuzhu and his colleagues at CICC wrote in a note.
Offline consumption that requires gatherings or face-to-face interaction has been affected again, and travel, restaurants and home sales have weakened.
While industrial production has remained stable overall, construction investment and freight logistics have declined and production has been disrupted at some companies.
- George Russell, with Reuters