PTI, Beijing :
Ruling out a new stimulus package to halt the slowdown of its economy, China on Friday said the new growth target of 6.5-7 per cent can be attained by improving domestic demand, consumption and innovation without resorting to special measures like devaluation of currency.
The growth targets set for this year and the 13th Five-Year Plan period (2016-2020) can be realised through improving domestic demand, consumption and innovation, without big stimulus, Zhou Xiaochuan, Governor of the People’s Bank of China (PBOC), said.
“China will stick to the prudent monetary policy,” Zhou told a press conference on the sidelines of the national legislature’s annual session.
China has set its growth target for 2016 in the range of 6.5-7 per cent, while that for years leading to 2020 is above 6.5 per cent.
These are “anticipatory targets” which are made on the basis of China’s growth trajectory in the past and its growth potential in the future, Zhou said.
He said with the improvement in domestic demand, consumption and innovation, the growth targets are attainable without resorting to stimulus.
While ruling out stimulus to revive the economy like it did in the past, China, however, has been approving huge infrastructure development projects costing billions of dollars like the second rail link to connect Tibet.
Zhou said China seeks growth by relying more on domestic demand as the old growth driver of exports loses steam and is not able to contribute to the economic growth the way it used to.
He said China has no intention of manipulating its currency rate to stimulate exports.
The fall of exports accelerated the economic slowdown as the GDP last year slipped below 6.9 per cent, the worst in 26 years.
Last month, speaking at the G20 Finance Ministers and Central Bank governors meeting in Shanghai, Zhou assured the world that China would not drastically devalue its currency to boost its trade. Near four per cent devaluation of yuan last year sent the world markets in a tizzy. The devaluation following series of stock market crashes was reportedly aimed at boosting falling export revenues.
On Friday, Zhou dismissed the concerns over exports decline saying the market should pay more attention to China’s net exports, citing nearly USD 600 billion of goods trade surplus in 2015.
“The share of China’s exports edged up in the global trade,” Zhou said.
Weighed on by weak global demand, exports slumped more than 20 per cent in February, the sharpest drop since May 2009, while imports dropped 8 per cent.
Zhou attributed the lacklustre data to plunging global commodity prices, especially crude oil, and said China actually imported more goods last year.
“The imports of crude, copper, grain and soybean rose and only those of coal and aluminum saw drop,” he said.
In the event of global and domestic financial turbulence, however, Zhou said that China’s monetary policy will be flexible.
He said Chinese currency renminbi, or the yuan, has started to return to its normal and reasonable level after volatility and the trend will continue.
“There is no need at all to rush to buy US dollars,” he added.
The yuan has been heading south since the government revamped the foreign exchange mechanism last year, and concerns about capital outflows have been on the rise, he said.
The Chinese authorities have repeated that there is no basis for continued weakness of the yuan and China will not seek to boost exports through competitive devaluation.
Zhou attributed the previous depreciation to concerns on a slowing Chinese economy and market jitters caused by easing policies from Europe and Japan.
“Despite market fluctuations, investors will gradually become rational and make decisions based on China’s economic potential and balance of foreign exchange,” Zhou said.
He also played down concerns over the transfer risks in non-performing assets to other market players through the market of asset-backed securitisation (ABS).
Responding to queries about the bank’s ABS practice which might transfer risks in non-performing assets to other market players, Zhou said ABS is quite small in China and risks can be prevented through better oversight and transparency.
He defended it saying that it is a “market practice” and buyers are able to assess the risks. Zhou sought to explain that the assets bundled in ABS packages are usually priced lower than their original value and the buyers can take into consideration the changes of their value in the future before striking a deal.
China’s ABS started “relatively late” and the mortgage-backed securitisation would be among the country’s first step in tryouts, Zhou said.
Standardised operation and proper oversight are needed for the healthy development of ABS in China and the country is drawing lessons from the ABS process in the international financial crisis to forestall risks, he said.
Pan Gongsheng, PBOC vice governor and head of the State Administration of Foreign Exchange, said there are a few pilot ABS programmes in China that are carried out by some carefully-chosen financial institutions.
Ruling out a new stimulus package to halt the slowdown of its economy, China on Friday said the new growth target of 6.5-7 per cent can be attained by improving domestic demand, consumption and innovation without resorting to special measures like devaluation of currency.
The growth targets set for this year and the 13th Five-Year Plan period (2016-2020) can be realised through improving domestic demand, consumption and innovation, without big stimulus, Zhou Xiaochuan, Governor of the People’s Bank of China (PBOC), said.
“China will stick to the prudent monetary policy,” Zhou told a press conference on the sidelines of the national legislature’s annual session.
China has set its growth target for 2016 in the range of 6.5-7 per cent, while that for years leading to 2020 is above 6.5 per cent.
These are “anticipatory targets” which are made on the basis of China’s growth trajectory in the past and its growth potential in the future, Zhou said.
He said with the improvement in domestic demand, consumption and innovation, the growth targets are attainable without resorting to stimulus.
While ruling out stimulus to revive the economy like it did in the past, China, however, has been approving huge infrastructure development projects costing billions of dollars like the second rail link to connect Tibet.
Zhou said China seeks growth by relying more on domestic demand as the old growth driver of exports loses steam and is not able to contribute to the economic growth the way it used to.
He said China has no intention of manipulating its currency rate to stimulate exports.
The fall of exports accelerated the economic slowdown as the GDP last year slipped below 6.9 per cent, the worst in 26 years.
Last month, speaking at the G20 Finance Ministers and Central Bank governors meeting in Shanghai, Zhou assured the world that China would not drastically devalue its currency to boost its trade. Near four per cent devaluation of yuan last year sent the world markets in a tizzy. The devaluation following series of stock market crashes was reportedly aimed at boosting falling export revenues.
On Friday, Zhou dismissed the concerns over exports decline saying the market should pay more attention to China’s net exports, citing nearly USD 600 billion of goods trade surplus in 2015.
“The share of China’s exports edged up in the global trade,” Zhou said.
Weighed on by weak global demand, exports slumped more than 20 per cent in February, the sharpest drop since May 2009, while imports dropped 8 per cent.
Zhou attributed the lacklustre data to plunging global commodity prices, especially crude oil, and said China actually imported more goods last year.
“The imports of crude, copper, grain and soybean rose and only those of coal and aluminum saw drop,” he said.
In the event of global and domestic financial turbulence, however, Zhou said that China’s monetary policy will be flexible.
He said Chinese currency renminbi, or the yuan, has started to return to its normal and reasonable level after volatility and the trend will continue.
“There is no need at all to rush to buy US dollars,” he added.
The yuan has been heading south since the government revamped the foreign exchange mechanism last year, and concerns about capital outflows have been on the rise, he said.
The Chinese authorities have repeated that there is no basis for continued weakness of the yuan and China will not seek to boost exports through competitive devaluation.
Zhou attributed the previous depreciation to concerns on a slowing Chinese economy and market jitters caused by easing policies from Europe and Japan.
“Despite market fluctuations, investors will gradually become rational and make decisions based on China’s economic potential and balance of foreign exchange,” Zhou said.
He also played down concerns over the transfer risks in non-performing assets to other market players through the market of asset-backed securitisation (ABS).
Responding to queries about the bank’s ABS practice which might transfer risks in non-performing assets to other market players, Zhou said ABS is quite small in China and risks can be prevented through better oversight and transparency.
He defended it saying that it is a “market practice” and buyers are able to assess the risks. Zhou sought to explain that the assets bundled in ABS packages are usually priced lower than their original value and the buyers can take into consideration the changes of their value in the future before striking a deal.
China’s ABS started “relatively late” and the mortgage-backed securitisation would be among the country’s first step in tryouts, Zhou said.
Standardised operation and proper oversight are needed for the healthy development of ABS in China and the country is drawing lessons from the ABS process in the international financial crisis to forestall risks, he said.
Pan Gongsheng, PBOC vice governor and head of the State Administration of Foreign Exchange, said there are a few pilot ABS programmes in China that are carried out by some carefully-chosen financial institutions.
