PBOC adviser says China's GDP target difficult to achieve

PBOC adviser says China's GDP target difficult to achieve
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(June 25): Effects related to the Covid pandemic in recent months will make it challenging for China to meet its 5.5% annual growth target, a central bank adviser said, adding that pro-economy policies including special bond issuance could be on the way.

China’s economy could see a strong rebound in the second half, “but difficulties remain for the 5.5% target”, Wang Yiming, an adviser to the monetary policy committee of the People’s Bank of China (PBOC), said at a live-streamed forum on Saturday (June 25). The country could consider trying to boost the economy by introducing special national bonds that don’t count as financial deficits, said Wang, without giving details.

The comments came after Chinese President Xi Jinping reaffirmed that the gross domestic product (GDP) target will be met despite concerns from economists that Beijing’s stringent Covid-19 policies would sink the economy. 

It is widely speculated that China could issue special sovereign bonds again. The government sold one trillion yuan (US$150 billion or about RM657.76 billion) of the bonds in 2020 to pay for measures to fight the Covid-19 pandemic, but didn’t sell any last year or include them in the bond plan for this year. 

Wang, who helps craft China’s monetary policies, said the decline in financing demand is the key problem the country needs to tackle.

“The current monetary policy focuses on stabilising liquidity, and the policy tools are more structural ones, which send a signal to the market to guide a loose monetary environment and maintain financial stability as much as possible,” he said, adding that market liquidity “is abundant”.