China cbank warns of eco­nomic weak­ness due to re­forms

The Pak Banker - - FRONT PAGE -

China's econ­omy may face head­winds in com­ing months due to its re­form ef­forts, the cen­tral bank said on Fri­day and it warned that mon­e­tary pol­icy was be­ing blunted by a lack of new growth driv­ers and luke­warm ap­petite for new in­vest­ment.

Yet de­spite the pain of re­forms, the Peo­ple's Bank of China said the world's sec­ond-largest econ­omy should not be pow­ered by strong stim­u­lus in the medium term, and must in­stead de­pend on a re­tooled growth en­gine to drive ac­tiv­ity.

In its sec­ond-quar­ter mon­e­tary pol­icy re­port, the cen­tral bank also cau­tioned that more fi­nan­cial in­no­va­tion in China was height­en­ing risks by in­creas­ing volatil­ity in as­set prices and rais­ing debt lev­els.

"The econ­omy is still rel­a­tively re­liant on poli­cies in­tended to sta­bi­lize growth and on gov­ern­men­tled in­vest­ment," the cen­tral bank said in the 64-page re­port. It re­it­er­ated its stance by say­ing that pol­icy would be kept pru­dent, though there would be a fo­cus on keep­ing it "ap­pro­pri­ate" and nei­ther too tight nor too loose.

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