PBOC Panel Says China Economy Stable Amid Complex Conditions

Updated on
  • Central bank repeats pledges for stable funding, credit growth
  • Economists have raised second-quarter growth estimates

China’s central bank said the economy and financial markets are generally stable, though the environment is still “complex,” adding separately that risk prevention should be given greater emphasis.

The People’s Bank of China also said the recovery in major developed nations is continuing, according to a statement released Tuesday after a meeting of the advisory monetary-policy committee led by Governor Zhou Xiaochuan. The language was a change from the first quarter report, which said the complexity of the economic environment shouldn’t be underestimated, and that the recovery in developed nations was accelerating.

Reiterating it will stick to “prudent and neutral” policy, the PBOC said in the statement that it will "keep liquidity relatively stable and credit growing at a reasonable pace." Meanwhile, the monetary authority will "closely follow the latest developments" in the domestic and global economies while keeping an eye on international capital flows, it said.

The central bank said in a separate report released late Tuesday that cross-sector risks should be closely monitored and coordination of financial supervision should be strengthened to form a "joint force" that prevents gaps in financial regulation. China should better detect financial risks, especially those involving the quality of banking assets and the use of insurance funds, according to the 2017 financial stability report.

Stable Momentum

Economists have raised their second-quarter growth estimates, with the median forecast in a Bloomberg survey now seeing 6.8 percent expansion before the official report due for release July 17. China’s official factory gauge concluded the first half of the year on a robust note, offering evidence of stable momentum that gives policy makers room to continue defusing financial risks, while exports have held up and industrial profit growth has accelerated.

Australia & New Zealand Banking Group Ltd. raised its 2017 growth estimate to 6.7 percent from 6.5 percent, citing upbeat consumer confidence remains and strong services sector growth, according to a report released Tuesday.

— With assistance by Yinan Zhao, Dingmin Zhang, Miao Han, and Xiaoqing Pi

(Updates to add financial stability report in fourth paragraph.)
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