China’s central bank suggests it will stem flood of money into economy
- People’s Bank of China has shown a preference for restraint, in a quarterly monetary policy document that suggests major moves towards easing are unlikely
- Subtle shift from policy of pumping funds into the fragile economy over recent months, which has helped stimulate some sectors
China’s central bank, which has been pumping funds into the nation’s fragile economy over recent months, has suggested it will not flood the market with excessive liquidity, in a quarterly monetary policy document released on Monday.
The People’s Bank of China (PBOC) summarised its first quarter monetary policy committee meeting, during which the PBOC said it would block the “general valve” of money supply, showing a preference for restraint and suggesting major moves towards easing are unlikely.
The PBOC said China’s economic situation was healthy, in a much more upbeat reading than the last edition, when it saw only “stable” growth in the world’s second biggest economy.
The PBOC is at the centre of Beijing’s campaign to avoid an economic hard landing, and is heavily involved in efforts to steer the economy through the challenges of the US-China trade war and domestic reforms.
The statement came after the country’s financial system pumped a record 8.2 trillion yuan (US$1.22 trillion) in credit into the economy in the first quarter of this year, including 5.8 trillion yuan worth of bank loans.
The flood of money, enabled by the central bank, has resulted in a pickup in economic activity – as shown in leading economic indicators, such as construction equipment sales – and boosted stock and property markets.