The People’s Bank of China (PBOC) will increase support for the economy, vice governor Pan Gongsheng said, using a variety of tools to inject more liquidity.
The central bank hopes to stabilise economic growth, employment and prices, Pan said.
“We will continue to strengthen the implementation of prudent monetary policy and create a sound monetary and financial environment,” Pan said.
China has announced a package of some 33 measures that include fiscal, financial, investment and industrial policies designed to revive growth in the pandemic-hit economy.
China’s trade in goods is expected to maintain a reasonable surplus this year while relatively stable investment returns in yuan assets will help attract foreign investment, Pan said.
The central bank has pledged to step up support for the slowing economy, but analysts say the room to ease policy could be limited by capital outflows, as the US Federal Reserve raises interest rates, drawing money out of yuan-denominated instruments and into higher-yielding US dollar assets.
China’s cabinet said on Wednesday that it will increase the credit quota for policy banks by 800 billion yuan ($120 billion) to enable them to support infrastructure construction, according to state TV.
“Policy banks” are three government-owned banks used to finance infrastructure projects, among other policy support.
Premier Li Keqiang has vowed there will be positive economic growth in the second quarter, although analysts expect a contraction.
Zou Lan, head of the PBOC’s monetary policy department, told the briefing that the credit quota for policy banks will improve their ability to finance infrastructure projects.
- Reuters, with editing by Neal McGrath