Coronavirus: China central bank primed for stimulus boost as pandemic continues to plague economy

Central bank says greater policy support needed to offset the impact of the coronavirus pandemic, foreshadowing further monetary policy easing

But officials continue to indicate their reluctance to implement large-scale stimulus like that enacted during the global financial crisis in 2008-09

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China’s economy contracted 6.8 per cent in the first quarter and may remain weak in the second quarter as the impact of the coronavirus continues. Photo: EPA-EFE

Published: 3:49pm, 11 May 2020Updated: 10:36pm, 11 May 2020

China’s central bank promised at the weekend to implement greater policy support to offset the economic damage of the coronavirus pandemic, but continued to indicate its reluctance to enact a massive stimulus effort like that following the global financial crisis in 2008.

The statement from the People’s Bank of China (PBOC) comes amid increasingly heated debate between Beijing’s top policymakers about the appropriate scale of an economic rescue package and how to pay for it. The discord has taken on new urgency as China readies to hold the first session of the annual National People’s Congress next week.

“Economic growth and employment needs greater emphasis when seeking a dynamic balance among multiple goals,” the PBOC said in its first quarter monetary policy implementation report released on Sunday.

“We must have greater policy support to offset the impact of the pandemic and provide an appropriate monetary and financial environment for the economic recovery,” it said, foreshadowing a further loosening of its monetary policy.

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The need for additional economic aid has grown as the world’s second largest economy continues to struggle to bring activity back to the level of late last year, before the outbreak began.

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