The head of China’s central bank said the nation’s growth rate has tumbled “a bit too sharply” and that policymakers have scope to respond, underscoring forecasts for further monetary easing in the world’s second-largest economy.
"China's inflation is also declining, so we need to be vigilant to see if the disinflation trend will continue, and if deflation will happen or not," People's Bank of China governor Zhou Xiaochuan said in remarks at the Boao Forum for Asia, an annual conference on the southern Chinese island of Hainan.
“China can have room to act,” both with interest rates and “quantitative” measures, he said.
Mr Zhou’s remarks followed fresh signs that China slowed further in the first quarter, after recording its weakest expansion since 1990 last year.
11-month low
A gauge of manufacturing slid to an 11-month low in March, a private report showed last week. Economists expect China’s central bank will lower both benchmark lending rates and banks’ required reserve ratios, adding to cuts made in recent months.
China’s leadership is trying to wean the economy off debt- fuelled property investment and old-line polluting industries, shifting towards services and growth led by domestic consumption.
While China’s president Xi Jinping has repeatedly said his nation is comfortable with a “new normal” of less-rapid expansion, officials are also wary of the slowdown weakening too much.
Growth target
Premier Li Keqiang earlier this month set a growth target of about 7 per cent for this year, while pledging action if it slows toward the lower limit of the range and cuts into jobs and income.
Mr Zhou said at the conference that patience was needed to see the effect of steps already taken to address the economic decline. Even with a more moderate pace than in the past, the president Mr Xi told Boao attendees that his nation “will continue to provide countries including Asian nations more markets, growth, investment and co-operation opportunities”.
China is building its influence even amid the slowdown, championing new lending institutions, including the Asian Infrastructure Investment Bank, to which additional nations signed up in recent days. – (Bloomberg)
