China’s central bank governor on Wednesday said the country will achieve its 5-percent growth target this year as there has been stronger economic momentum recently, with recovering production and consumption, stable employment, and improving price conditions.
Pan Gongsheng, governor of the People’s Bank of China, made the remarks while delivering a speech at the Annual Conference of Financial Street Forum 2023.
The economic transformation has continued to advance, high-tech investment maintained rapid growth, and final consumption contributed 83 percent to economic growth in the first three quarters, Pan said.
As China’s gross domestic product (GDP) has surpassed 120 trillion yuan (about 16.72 trillion U.S. dollars), a 5-percent annual growth rate is undeniably robust, Pan said, adding that it is more important to achieve high-quality and sustainable development and promote economic transformation than to pursue a high growth rate.
The International Monetary Fund (IMF) on Tuesday revised its growth forecast for China to 5.4 percent. “The Chinese economy is on track to meet the government’s 2023 growth target, reflecting a strong post-COVID recovery,” read an IMF statement.
Pan said the central bank has intensified counter-cyclical adjustments to bolster the real economy, such as lowering reserve requirement ratios for banks, bringing down interest rates, rolling out favorable policies for home buyers, and encouraging inclusive loans to agriculture and small firms.
The central bank will work to maintain reasonable credit and social financing growth, step up support for major national strategies, key areas and weak links, lower financing costs for the real economy, and promote a stable Chinese currency renminbi, or the yuan, Pan noted.
In his speech, Pan emphasized the importance of handling major financial risks in small and medium-sized financial institutions, the property sector, and local government debts.
High-risk financial institutions only accounted for a very small proportion in China’s financial system, and relevant authorities are making or implementing plans to reform small and medium-sized banks and defuse their risks, Pan said.
The central bank will work with related departments to improve risk monitoring and prevention and early correction mechanisms, Pan said.
While the property sector is in the middle of a major transformation, the spillover effect of the adjustment to the broad financial system is controllable as the government has adopted effective measures and the home market has improved thanks to an upward trend in the economy, Pan said.
He added that more efforts will be made to contain the property market risk, meet reasonable financing demands of developers, and support the construction of affordable housing.
Pan said the local government debts, mainly for infrastructure investment and backed by physical assets, have played a positive role in local development. The majority of the debts are in regions with significant economic scale or rapid growth rates, giving them the capacity to address the debt themselves.
Financial authorities have taken multipronged measures to defuse the risk this year, including promoting repayment of debts by selling assets and restricting new investments in regions under high debt pressure, Pan said.
He added that the central bank will also provide emergency liquidity support for regions with heavy debt burdens when necessary, and support local government financing vehicles in transforming into market-oriented enterprises that do not rely on government credit and are financially independent and sustainable.
In his speech, Pan said the central bank will also deepen the financial supply-side structural reform and accelerate the building of a modern financial system.
He highlighted the measures for advancing high-level financial opening up, promoting the internationalization of the yuan through prudent and solid actions, and facilitating trade and investment.
The central bank will also push forward the work related to China-U.S. and China-EU financial working groups, expand international financial cooperation, and actively participate in international economic and financial governance, Pan said.