BEIJING (Reuters) – Chinese central bank governor Zhou Xiaochuan said growth prospects have improved in the world’s second-largest economy, but its monetary policy remains prudent and neutral.
Earlier this week, China published upbeat data showing its economy got off to a strong start to 2017, supported by bank lending, a government infrastructure spree and a long-sought resurgence in private investment.
“China’s economic growth rate is stable overall, with growth prospects improving,” Zhou said, according to a post on the People’s Bank of China’s website on Saturday.
“China will continue to implement active fiscal policy, and prudent and neutral monetary policy.”
The People’s Bank of China (PBOC) on Thursday raised short-term interest rates for the third time in as many months, in what economists saw as a bid to curb capital outflows and keep the yuan currency stable after the Federal Reserve raised U.S. interest rates this week.
The PBOC has said specifically that Thursday’s action should not be seen as full-blown policy tightening like the Fed’s. The Chinese central bank has left its benchmark lending rate unchanged since an October 2015 cut.
The government has promised to contain debt and property market risks in 2017 following years of credit-fuelled expansion.
Data on Saturday showed China’s red-hot property market picked up pace in February after price gains had slowed in the previous four months.
Efforts will be made to contain debt levels, including restructuring of firms with heavy debt burdens, alongside a push to reduce excess industrial capacity, Zhou said in Beijing last week.
“In terms of macroeconomic policies, China is currently focussed on structural adjustments to the economy and pushing forward supply-side reform,” Zhou said.
He was speaking to other central bank governors and finance ministers from BRICS economies in Baden-Baden, Germany, during G20 meetings.
Zhou also met U.S. Treasury Secretary Steven Mnuchin at the G20 meetings on Saturday.
China’s Finance Minister Xiao Jie, who was also in Baden-Baden, said BRICS countries should strengthen macroeconomic coordination and jointly promote growth, according to the PBOC post on Saturday.
“And at the same time, unwaveringly support free trade and investment, and oppose protectionism,” Xiao said.
G20 finance ministers and central bankers, in their communique issued after a two-day meeting in Baden-Baden, rowed back on a pledge to keep an open and inclusive global trade system after being unable to find a suitable compromise with an increasingly protectionist United States.
The BRICS countries – Brazil, Russia, India, China and South Africa – are all in the G20.
The annual BRICS summit will be hosted by China in the coastal city of Xiamen in September.
(Reporting by Elias Glenn and Ryan Woo; editing by David Clarke/Ruth Pitchford)
