- Lagged impact from policy stimulus will begin to aid growth
- Optimistic that world economy will fuel Chinese exports
Some market participants have become too negative on China, where a recovery in property sales and monetary and fiscal easing should start to support growth, Ma Jun, chief economist of the People’s Bank of China’s research department, said Tuesday.
His comments come as the world’s second-biggest economy is on track for its slowest pace of growth in 25 years and after a $5 trillion stock market rout rattled investor confidence. He cited a recovery in property sales, macro policies that have been trying to stabilize the economy, and a pick up in global growth, as among positives for China.
“Some of the market participants are too bearish on the Chinese economic outlook,” Ma said in an interview in Shanghai. “I think partly because they didn’t recognize the few positive factors which will contribute to the stability of the growth outlook.”
Policy makers have sought to cushion the economy with six interest-rate cuts in the past year, increased infrastructure investment, and a range of other policy relaxations. While consumption has remained robust and services spending is surging, that hasn’t been enough to prevent a slowdown as weakness in residential construction and manufacturing weigh on the economy.
"We have been cutting interest rates and providing some more fiscal support to the economy but its impact on the real economy will take time to show up,” Ma said. “This lagged impact in the coming few quarters will help support the growth trajectory as well.”
“Our technical analysis shows that the time lag between monetary policy action and its maximum impact on the real economy is about nine months,” Ma said.
Ma joined the PBOC in April 2014 in the newly created post of chief economist of the bank’s research department, having previously been China economist at Deutsche Bank AG in Hong Kong. While Ma provides commentary in his role within the research bureau, that unit doesn’t set policy.
On the global outlook, demand for Chinese exports should hold up next year, Ma said, citing the International Monetary Fund’s growth forecast of 3.6 percent for the world economy in 2016, up from the 3.1 percent it has forecast for this year.
“If true, that would indicate a strong export demand for the Chinese economy,” he said. “I am hopeful that the global economy may be recovering, at least at a modest pace.”
— With assistance by Enda Curran