PBOC at the ready on growth goal: chief

Zhou Xiaochuan says the central bank will launch minor measures if mainland's economic expansion drops below Beijing's target range

PUBLISHED : Saturday, 12 April, 2014, 12:59am
UPDATED : Saturday, 12 April, 2014, 1:42am

The mainland's central bank will roll out minor measures if economic growth falls below the range targeted by the central government, People's Bank of China governor Zhou Xiaochuan said yesterday.

The State Council has set an economic growth target of about 7.5 per cent this year and had considered what the normal range of growth should be, Zhou said at the Boao Forum.

He said that if mainland gross domestic product growth was within the normal range, the government would not need to launch significant policies to boost growth. "But if the economic growth diverts from the normal range, we will use monetary policy fine-tuning, or slightly bigger adjustments [to boost growth]," Zhou said. "This is the framework of the current controlling measures."

Premier Li Keqiang said on Thursday that no short-term stimulus measures would be rolled out to foster economic growth because the government's target was flexible as long as enough jobs were created.

Zhou said the central bank had multiple objectives when deciding its monetary policy and considered not only the labour market, but also inflation, economic growth and balance of payments data. "It's difficult to compare the weight between low inflation and the creation of jobs, but I think there is a conventional practice - a low inflation target has the highest weight in our multiple objectives," he said.

Economic conditions could be inconsistent with demand for labour, with GDP growth having slowed last year while job creation increased, Zhou said, and monetary policy was dynamically adjusted with reference to the four indicators. He also said that credit growth had remained stable this year and was not too high, while voicing concern about the high level of leverage at mainland enterprises. "When credit continues to expand, the leverage level will also go up," he said.

Zhou described recent bank runs at some small lenders as being small scale, but added that they showed that a deposit-insurance system was needed as part of the mainland's financial sector reforms, which also include interest rate liberalisation and yuan exchange rate reform.

Securities regulators on the mainland and in Hong Kong on Thursday announced new rules that will allow direct share trading between the Hong Kong and Shanghai stock exchanges. The so-called through train scheme, which will let mainlanders trade a total quota of 250 billion yuan (HK$314.2 billion) worth of Hong Kong stocks through mainland brokers and Hong Kong investors to trade up to 300 billion yuan of A shares, is expected to be in place within six months.

Zhou said it would boost cross-border use of the yuan, helping it become a more convertible currency.

Joint efforts with other authorities and ministries were important when financial reforms were under way, he said, while noting that the inclusion of too many parties could hamper communication.