Forceful policy needed to fix economy – PBOC

China’s central bank, the People’s Bank of China (PBOC), has released its quarterly policy implementation report on Friday. According to the report, China’s economy is expected to rebound in 2023, and the monetary policy will be precise and forceful. The PBOC will focus on stabilising economic growth and prices while avoiding “flood-like” stimulus. It will also support domestic demand expansion. However, the report also warned that the external environment remains “severe and complex,” and the basics of the domestic economic recovery are “not solid.”

The PBOC pledged to keep liquidity reasonably ample and maintain effective credit growth. The central bank will closely monitor inflation trends and keep energy and food prices stable. The report stated that China will closely watch the trend and changes in inflation and keep the prices of energy and food stable. The report did not change substantially from the previous one.

The government reshuffle, especially of the economic team, is anticipated, and economic targets and policies for 2023 will be announced during an annual parliamentary meeting kicking off on March 5. Premier Li Keqiang said that the world’s second-largest economy is stabilising and improving, but it still faces many challenges after the country’s economic growth slowed to one of the worst levels in half a decade due to stringent COVID-19 lockdowns and curbs in 2022.

The PBOC also pledged to start improving social expectations and boosting confidence, mainly focusing on stabilising economic growth, employment, and prices. The problematic property sector showed a tentative recovery, and the PBOC said it would satisfy reasonable financing demand in the sector but would insist on not using real estate as a short-term means to stimulate the economy. The central bank issued a notice late on Friday to encourage commercial banks to issue loans for the purchase of housing by rental housing groups.