Expect Beijing to focus on avoiding asset bubbles, analysts say
Observers of key economic meeting see policymakers trying to rein in growth of money supply next year
The mainland is expected to try to restrain the growth in its money supply for next year, as it puts a priority on controlling financial risks to avoid asset bubbles, economists said.
Market watchers are eagerly reading between the lines of the post-meeting statement of the three-day Central Economic Work Conference, which wrapped up on Friday. It is an annual meeting of key policymakers to make economic plans for the next year.
Commerzbank economist Zhou Hao said he expected the target for M2, a broad measure of money supply, to be moderated to 12 per cent growth for 2017, versus 13 per cent this year.
“The theme for next year is deflating the bubble. The central bank could make capital more costly in the market through open market operations and other tools with a policy biased towards tightening,” Zhou said, adding that such steps need not include a rise in benchmark interest rates.
In November, M2 grew 11.4 per cent, slightly lower than October’s 11.6 per cent and below the 13 per cent whole-year target, indicating that the central bank had already stepped back from the record issuing of credit seen in the first quarter.
Analysts said credit to the property sector might also be further tightened, pointing to a line from Friday’s statement that “housing is for living, not for speculation”.