China's central bank pledges stronger counter-cyclical measures

BEIJING - China's central bank has signaled stronger counter-cyclical adjustments and more flexible monetary policy to fend off financial risks and support the real economy.

The People's Bank of China (PBOC) will step up efforts to make full use of financial policies including the issuance of reloans and smooth policy transmission to stabilize the job market and boost the real economy, central bank governor Yi Gang wrote in an article released on the PBOC website.

Since the novel coronavirus outbreak, China has increased policy support on the monetary and fiscal fronts to help businesses, especially small ones, to tide over difficulties.

Along with targeted reserve requirement ratio cuts for eligible banks, China has also issued special reloans to provide preferential interest rate credit support to enterprises and special bonds to provide sufficient funds to commercial lenders.

The string of counter-cyclical measures taken so far had produced positive outcomes, with reasonable growth in credit and social financing as well as a reduction in business financing costs, Yi noted.

In the first quarter, the new lending rate of China's five major banks extended to small and micro enterprises averaged at 4.4 percent, down 0.3 percentage points from the rate in 2019, according to Yi.

While China has fast-tracked the restoration of economic activities, the global spread of the novel coronavirus has presented new challenges for the economic recovery, Yi said.

But with the size and resilience of the economy, China is still well-placed to keep the economy and financial market stable, he added.

The reiteration of further policy measures followed the central bank's first-quarter report, which pledged to step up counter-cyclical adjustments to support the real economy and make the prudent monetary policy more flexible and appropriate.

Official data showed China's economic activities continued to normalize as industrial output, retail sales and investment saw across-the-board improvements, but the recovery still faces uncertainties and challenges from the global spread of the virus.