PBOC pares eco­nomic growth goal

China Daily (Canada) - - FRONT PAGE -

ef­fects of al­ready-an­nounced poli­cies will be­come ev­i­dent start­ing in the third quar­ter.

Re­cov­er­ies in the United States and Euro­pean economies are likely to sup­port China’s ex­port re­bound. In ad­di­tion, the rise of hous­ing prices since April will ac­cel­er­ate prop­erty in­vest­ment, ac­cord­ing to the re­port.

Ma­jor eco­nomic fig­ures for May are sched­uled to be re­leased by the Na­tional Bureau of Statis­tics on Thurs­day, and an­a­lysts’ con­sen­sus is for some slight im­prove­ment.

Credit rat­ings agency Moody’s In­vestors Ser­vice Inc re­leased a re­port on Wed­nes­day, say­ing that the num­ber of com­pa­nies in­China in fi­nan­cial dis­tress will rise as slower do­mes­tic eco­nomic growth and the gov­ern­ment’s re­form agenda, in­tended to al­low mar­kets to play a “de­ci­sive” role, ex­pose over­stretched bal­ance sheets in the cor­po­rate sec­tor.

“But pol­icy eas­ing and gov­ern­ment sup­port will pre­vent ris­ing cor­po­rate dis­tress from es­ca­lat­ing to a level that would cause sys­temic risk to the on­shore and off­shore mar­kets,” it said.

It added: “Room is also avail­able for a fur­ther loos­en­ing of mon­e­tary pol­icy should macroe­co­nomic con­di­tions con­tinue to de­te­ri­o­rate, given that real lend­ing rates and the re­serve re­quire­ment ra­tio re­main high.”

Com­pared with other emerg­ing mar­kets, China has a more sta­ble eco­nomic foun­da­tion, so the ex­pected move by the US Fed­eral Re­serve to raise in­ter­est rates will have merely a limited im­pact on the coun­try’s fi­nan­cial sys­tem, the PBOC re­port said.

How­ever, cap­i­tal out­flows and cur­rency de­pre­ci­a­tion in other emerg­ing economies may cut China’s ex­ports, it said.

Ma Jun, chief econ­o­mist at the Peo­ple's Bank of China

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