China’s central bank pledges timely policy tool adjustment
The PBOC will support more overseas institutions issuing panda bonds
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[BEIJING] China’s central bank pledged to adjust monetary policy tools in a timely manner and facilitate so-called panda bond issuance, a statement showed on Sunday (Aug 2).
The People’s Bank of China (PBOC) will continue to implement an appropriately loose monetary policy and maintain ample liquidity, according to the readout of a work meeting that was held on Saturday to map out the second half of the year.
The PBOC pledged in its statement to “steadily promote the high-level opening of the financial market”; “advance domestic and international infrastructure cooperation”; and “enrich liquidity management and risk hedging tools”.
It would “continue to financially support debt risk resolution of local government financing vehicles, and promote their market-oriented transformation”, it added.
Support from central bank
As well as supporting more overseas institutions issuing yuan-denominated bonds, which are known as panda bonds, the central bank said that it would help Shanghai enhance cross-border finance and offshore financial services, and consolidate Hong Kong’s position as an offshore yuan hub.
The meeting, headed by PBOC governor Pan Gongsheng, followed a call by the Communist Party’s Politburo on Thursday to accelerate the pace of fiscal spending on already budgeted infrastructure projects during the remainder of the year.
Slow economic growth
Data that had been released last month showed economic growth at 4.3 per cent in the second quarter, its slowest in more than three years and missing the lower end of a full-year target of 4.5 to 5 per cent.
The Politburo, a top party decision-making body, acknowledged “difficulties and challenges facing the economy” at its meeting, the official Xinhua news agency reported.
China must “accelerate the pace of fiscal expenditure” and enhance the flexibility and forward-lookingness of monetary policy, a summary of the discussion showed.
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