China’s 6.9% growth ‘may continue’, says PBoC chief
October 15 2017 11:16 PM
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Commuters using smartphones stand in line at a bus station in Beijing. Economic indicators show ‘stabilised and stronger growth’ and the momentum of a 6.9% expansion in the first six months of 2017 ‘may continue in the second half,’ according to central bank governor Zhou Xiaochuan.

Bloomberg Beijing

Economic indicators show “stabilised and stronger growth” and the momentum of a 6.9% expansion in the first six months of 2017 “may continue in the second half,” People’s Bank of China (PBoC) governor Zhou Xiaochuan said.
Imports and exports increased rapidly, fiscal income grew, and prices have been steady, Zhou said, according to a statement the central bank released on Saturday after he attended meetings of global finance chiefs this week in Washington. The effects of a campaign to rein in leverage are showing, and China will monitor and prevent shadow banking and real estate risk, he said.
China’s broadest gauge of new credit, released on Saturday, exceeded projections, signalling that the funding taps remain open even as the government pushes to curb excessive borrowing.
“Positive progress has been achieved in economic transformation,” the statement said. “China will continue to pursue a proactive fiscal policy and a prudent monetary policy, with a comprehensive set of policies to strengthen areas of weakness.”
Zhou’s comments, delivered before a gathering of Group of 20 finance ministers and central bankers, come before the release of third-quarter gross domestic product, scheduled for October 19. Economists project a moderation to 6.8% growth from the 6.9% pace in the second quarter amid government efforts to reduce overcapacity and ease debt risk.
Steady growth in the world’s second-largest economy gives policy makers additional room to push ahead with reforms. Zhou recently made a fresh call to further open up the financial sector, warning that such an overhaul will become more difficult if the window of opportunity is missed. Some analysts say they expect reforms will pick up should President Xi Jinping further consolidate power after the 19th Party Congress starting next week.
Zhou is also in Washington for meetings of the World Bank and International Monetary Fund, where officials expressed an increasingly upbeat economic outlook. He is scheduled to speak on a global economy panel with Federal Reserve Chair Janet Yellen, Bank of Japan governor Haruhiko Kuroda and European Central Bank vice-president Vitor Constancio.
The IMF this week increased its global growth forecast amid brightening prospects in the world’s biggest economies. It also raised its China growth estimate to 6.8% this year and 6.5% in 2018, up 0.1 percentage point in each year versus July.
“We expect that the authorities can and will maintain a sufficiently expansionary macro policy mix to meet their policy target of doubling 2010 GDP by 2020,” Changyong Rhee, the fund’s Asia and Pacific director, said at a briefing on Friday in Washington. “However, as this expansionary policy comes at the cost of a further large increase in debt, it also implies that there’s more downside risk in the medium-term due to this rapid credit expansion.”
Aggregate financing to the economy stood at 1.82tn yuan ($276bn) in September, the People’s Bank of China said on Saturday, compared with an estimated 1.57tn yuan in a Bloomberg survey and 1.48tn yuan the prior month.
A report on Friday showed that exports and imports both accelerated. Growth is forecast to slow after a robust first half, when it started the year with the first back-to-back quarterly acceleration in seven years, then surprised economists by matching that 6.9% expansion again in the second quarter.
Meanwhile, the PBoC’s new tailored move to steer credit to small businesses, farmers and startups also indicates that the leadership remains vigilant about economic growth.
The PBoC said on September 30 that it will reduce how much cash some banks must hold as reserves from next year, with the size of the cut linked to lending to parts of the economy where credit is scarce. It has kept benchmark lending rate at a record low for almost two years.
“Growth in China is very strong,” Markus Rodlauer, IMF’s Asia and Pacific deputy director, said at the briefing. “There’s no need for expansionary fiscal and monetary policies.”
Zhou also told finance chiefs China encourages private sector investment in Africa, and that it has expanded rapidly in recent years. “Experience shows a large demand of cross-country infrastructure in Africa, especially in the energy and power sector,” the statement said, adding that development banks have “huge potential” and can do more for the continent.



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