China’s monetary policy has ample room to meet challenges – state media

BEIJING (Reuters) – China’s financial coverage has ample room and enough instruments, together with additional chopping banks’ reserve necessities, to deal with new challenges amid a shaky financial restoration, a commentary within the state-owned Securities Occasions mentioned on Sunday.

China’s economic system grew simply 0.4% within the second quarter from the identical interval final yr, down sharply from 4.8% development for the primary three months, the federal government mentioned on Friday, as widespread lockdowns to extinguish outbreaks of COVID-19 hobbled the world’s second-largest economic system.

Whereas June knowledge confirmed indicators of enchancment, analysts don’t count on a fast restoration as China sticks to its robust zero-COVID coverage, the nation’s property market is in a deep hunch and the worldwide outlook is darkening.

“Looking to the second half of the yr, the muse of our financial rebound remains to be not strong and financial operations nonetheless face many unsure and unstable elements,” Sunday’s commentary mentioned.

“When it comes to dealing with new challenges and modifications which will exceed expectations, financial coverage has enough house and ample instruments.”

However many analysts consider the Folks’s Financial institution of China has solely restricted room for additional easing resulting from worries about capital outflows, because the U.S. Federal Reserve and different central banks aggressively elevate rates of interest to combat hovering inflation.

The Securities Occasions commentary cited China’s comparatively constrained financial coverage stance through the pandemic, preemptive insurance policies to stabilise capital outflows, together with cuts in banks’ overseas change reserves and a extra versatile yuan foreign money, amongst elements that would supply a buffer to outdoors shocks.

“We are going to … maintain the yuan change charge mainly steady on an inexpensive and balanced stage and proactively and steadfastly handle new challenges and new modifications,” it mentioned.

(Reporting by Stella Qiu and Ryan Woo; Enhancing by William Mallard)