China central bank to step up policy implementation to support economy

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FILE PHOTO: The headquarters of the People's Bank of China, the central bank, is pictured in Beijing

BEIJING -China’s central bank will strengthen the implementation of its prudent monetary policy and bring forward steps to support the economy, vice governor Pan Gonsheng said on Thursday.

The People’s Bank of China (PBOC) will use various policy tools to step up liquidity injections to keep liquidity in the economy reasonably ample, Pan told a news conference.

The central bank aims to stabilise economic growth, employment and prices, Pan said, adding that financial institutions should maintain prudence in their operations and prevent risks.

“We will continue to strengthen the implementation of prudent monetary policy and create a sound monetary and financial environment,” Pan said.

China’s cabinet has announced a package of 33 measures covering fiscal, financial, investment and industrial policies to revive its pandemic-ravaged economy.

China’s trade in goods is expected to maintain a reasonable surplus this year and the relatively stable investment returns in yuan assets will help attract foreign investment, Pan said.

The central bank has pledged to step up support for the slowing economy, but analysts say the room to ease policy could be limited by worries about capital outflows, as the U.S. Federal Reserve raises interest rates.

China’s cabinet said on Wednesday that it will increase the credit quota for policy banks by 800 billion yuan ($120 billion) to enable them to support infrastructure construction, according to state TV.

Premier Li Keqiang has vowed to achieve positive economic growth in the second quarter, although many private sector economists have pencilled in a contraction.

Zou Lan, head of the PBOC’s monetary policy department, told the briefing that the credit quota for policy banks will help improve their ability to finance infrastructure projects.

(Reporting by Kevin Yao and Beijing newroom. Editing by Jane Merriman and Susan Fenton)