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China's economic recovery
EconomyChina Economy

China to push supportive monetary policy as financial risks ease: central bank chief

  • PBOC governor Pan Gongsheng says local debt has fallen and number of high-risk small and medium banks has ‘nearly halved’ from peak

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People’s Bank of China chief Pan Gongsheng says the central bank will aim to guide “reasonable” credit growth and the steady decline of financing costs for companies and households. Photo: Reuters
Amanda Lee
China is gradually resolving a series of financial risks and will press on with a supportive monetary policy to ensure an economic recovery, the country’s central bank chief said on the weekend.
In an interview aired on Saturday, People’s Bank of China (PBOC) governor Pan Gongsheng told state broadcaster CCTV that the number of local government financing platforms and the level of outstanding debt had continued to fall.
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Local government financing platforms are companies that borrow on behalf of provinces and cities, mainly to finance infrastructure projects such as roads and ports.

The maturing debt of “most” of these financing platforms had either been extended, restructured or replaced, Pan said, adding that financing costs for local government debt had fallen “significantly”.

He also said the number of high-risk small and medium-sized banks had “nearly halved from the peak”.

The central bank will aim to guide “reasonable” growth of credit and the steady decline of financing costs for companies and households, and maintain the “basic” stability of the yuan exchange rate.

Pan said financial institutions were encouraged to increase support for weak links or in key areas, satisfy “reasonable” consumer financing demands in a more targeted manner and study measures to enhance the coordination of macro policies.

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“In the next step, we will strengthen countercyclical and cross-cyclical adjustments and focus on supporting stable expectations, boosting confidence, and supporting the consolidation and strengthening of the economic recovery,” Pan said.

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Local government debt pressure is just one of a number of headwinds China’s economy is facing. The country is also in the midst of a protracted slump in the property market, with weak credit demand reflected in some of the key money supply and bank lending data last month.

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