Governor Zhou Xiaochuan pledges not to use “exchange rates or other monetary policies to stimulate exports", nor resort to massive capital injections.
Beijing (AsiaNews) – Despite its economic situation, China will maintain its level of growth without resorting to big stimulus measures, said Zhou Xiaochuan, governor of the People’s Bank of China (PBC), the country’s central bank, at a press conference this morning, on the sidelines of the National People’s Congress currently underway in the Chinese capital.
After missing its 6.9 per cent target last year, Beijing has set an economic growth target range of 6.5 to 7 per cent for the next five years amid great difficulties.
In addition to the global crisis, domestic demand is down, exports have plunged, manufacturing suffers from overproduction, and the stock exchange has endured wild fluctuations.
Yet, Zhou believes that growth targets will be met without using "exchange rates or other monetary policies to stimulate exports", or making use of massive capital injections, as in 2009-2010. At the same time, he added, "if there were international or domestic upheavals, we will show flexibility."
Since 2014, China has intervened on the exchange rate six times and reduced banks’ reserve requirement ratios several times to encourage lending. In 2009-2010, it injected 4 trillion yuan to promote growth; however, this ended up fostering corruption and speculation.
Zhou also tried to downplay concerns over China’s massive capital flight. Some economists estimate the loss at one trillion dollars last year. For the PBC governor, this “cyclical" phenomenon has been going on "for years".
Likewise, he note that he was not concerned about the drop in foreign currency reserves, the world’s largest. Last month, they shed US$ 28.6 billion to stand at US$ 3.2 trillion. They had dipped by about US$ 100 billion in both December and January.