[Economics] China promises measures to stabilize the economy in 2022

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The central bank pledged to proactively introduce monetary policies that promote economic stability.

Soldiers of the People's Liberation Army in front of the People's Bank of China (PBOC) in Beijing, China, Monday, December 13, 2021. Economists predict that China will begin adding fiscal stimulus in early 2022 after the country's top officials They said their key goals for the coming year include countering growth pressures and stabilizing the economy. Photographer: Andrea Verdelli / Bloomberg (Andrea Verdelli / Bloomberg)

 

Bloomberg - China is judged to add stimulus to stabilize growth next year, and several ministries vowed to take more proactive measures to reverse the slowdown caused by worsening housing downturn, consumer weakness and the coronavirus.

As downward pressure on the economy mounts, ensuring stability has become the top priority of top leaders for the coming year, and they called on all regions and ministries to share responsibility for achieving that goal. In response to this call, the central bank committed to proactively introduce monetary policies that favor economic stability.

The People's Bank of China will use a series of monetary policy tools to maintain "reasonable and ample" liquidity and ensure that credit growth is stable, according to a statement released Monday night after the bank's 2022 planning conference. . On the same day, the Finance Ministry announced that it will proactively implement fiscal policies to stabilize growth, with further cuts in taxes and rates planned for 2022.

 

China's economy has slowed in recent months, with the housing market slumping down on indebted developers and also depressing industrial production, leading to falling house prices and weakening investment and private consumption. The appearance of the omicron variant is an additional threat to the economy, as it could affect export demand and the tightening of restrictions in the country could further damage spending.

Last month, residential property sales and new home acreage started by real estate developers fell about 20% from a year earlier, slowing the pace of global investment spending. Retail sales growth slowed to 3.9% in November from a year earlier as people stayed home due to new virus outbreaks, while industrial production increased 3.8%.

Industrial production and retail sales grow less than before the pandemic.
Earlier this month, the People's Bank of China will lose banks to lower the benchmark lending rate by five basis points after releasing 1.2 trillion yuan (US $ 188 billion) of money by reducing the amount of funds they hold. banks must keep in reserve. It also lowered the interest rate on the small business lending program. Credit growth recovered in November after slowing for nearly a year.

So far, the People's Bank of China has taken a dovish approach to monetary stimulus, but expectations are growing that it will do more next new, especially if housing market woes continue and private consumption doesn't pick up. Monday's statement from the central bank comes after it pledged last week to be more proactive in using policy tools to further support the real economy in 2022.

The central bank will focus on making finance better serve the real economy in 2022, People's Bank of China Governor Yi Gang said in an interview with Xinhua published on Tuesday. According to Yi, that means keeping credit growth stable so that the money supply and total social financing increase at the same rate as nominal gross domestic product; optimize the loan structure with more loans to small businesses and green or technology companies; and constantly reduce financing costs.

 

Link: https://www.bloomberglinea.com/2021/12/28/china-promete-medidas-para-estabilizar-la-economia-en-2022/