China’s central bank vows ‘moderately loose’ monetary policy

A woman walks past the headquarters of the People’s Bank of China, the country’s central bank, in Beijing on July 9, 2024. (Photo by ADEK BERRY / AFP)

Beijing, China — China’s central bank has outlined a “moderately loose” monetary plan aimed at boosting domestic demand to spur growth, days after President Xi Jinping called for more proactive macroeconomic policies.

Beijing last year struggled to lift the economy out of a slump fuelled by a property market crisis, weak consumption and soaring government debt.

Officials have unveiled measures aimed at bolstering growth, including cutting interest rates and easing homebuying restrictions, but economists have warned more direct stimulus may still be needed.

READ: China unveils fresh stimulus to boost ailing economy

The People’s Bank of China (PBoC) said in a statement it will “implement a moderately loose monetary policy… to create a good monetary and financial environment for promoting sustained economic recovery”.

The statement released Saturday reiterated plans to cut interest rates and the reserve requirement ratio which dictates how much banks must hold in their coffers, rather than lending or investing.

It said the changes would be made “at an appropriate time” depending on conditions at home and abroad.

The PBoC emphasized the need to weed out corruption — signalling the continuation of a long-running crackdown in China’s finance industry.

It also said it would continue to help local governments resolve debt burdens with “financial support”.

The measures are to “prevent and resolve financial risks in key areas, further deepen financial reform and high-level opening up, focus on expanding domestic demand, stabilizing expectations, and stimulating vitality,” the statement said.

The bank’s announcement came after officials convened for a two-day conference in the capital.

Beijing was aiming for growth of around five percent in 2024, a goal Xi has expressed confidence in achieving but which many economists believe will be narrowly missed.

The International Monetary Fund expects China’s economy to have grown by 4.8 percent in 2024 and to grow 4.5 percent in 2025.