How the China's Central Bank Plans to Steer Economic Recovery



by FARUK IMAMOVIC

How the China's Central Bank Plans to Steer Economic Recovery
© Getty Images News/Lintao Zhang

In an unprecedented move, the central bank has announced its intentions to refine its policy to be more "precise and forceful." This declaration comes on the heels of the release of third-quarter economic data, marking the first time Governor Pan has commented on the bank’s policy post-publication.

Tapping into the Capital Markets and Bolstering Investor Confidence

Governor Pan has expressed the bank's commitment to rejuvenate the capital markets, focusing on restoring investor confidence. The emphasis on these areas underlines the importance of capital markets in the nation's economic infrastructure.

By boosting investor morale, the bank aims to stimulate further financial investments and activity. The central bank’s objective, according to Pan, is multifaceted. He elucidated on the broader goals: “implement macro policy adjustments in response to the changes in the economic situation, effectively strengthen financial supervision, focus on expanding domestic demand, boosting confidence and preventing risks, and promote a sustained recovery in the economy”.

The positive tilt in China’s economic trajectory was evident in the recent data. The third quarter showcased a growth that exceeded analysts’ expectations. Furthermore, both consumption and industrial activities in September showed promising signs, an indication that the recent policy measures have begun to pave the way for a sustained recovery.

Stabilizing the Yuan and Safeguarding Foreign Currency Assets

Another critical focus for the central bank, as highlighted by Pan, is the stability of the yuan. The governor emphasized the importance of preventing "abnormal fluctuations in cross-border fund flows" and maintaining equilibrium in the foreign exchange market.

As part of its strategy, the bank plans to steadily advance its yuan internationalisation scheme. This will involve establishing a risk warning and control system for overseas investments. Pan also touched upon the significance of safeguarding the nation’s foreign currency assets, ensuring they remain protected and stable.

The central bank’s report offers a glimpse into the near-term financial and economic priorities of the nation. With a strong emphasis on precision, force, and proactive policy adjustments, the bank aims to spearhead an era of economic resilience and growth.

As the world closely watches, the steps taken in the coming months will be crucial in shaping the nation's financial landscape.

China