PBOC governor says China’s 6.9% growth may continue in second half

Bloomberg

Economic indicators show ‘stabilized and stronger growth’ and the momentum of a 6.9 percent expansion in the first six months of 2017 ‘may continue in the second half,’ People’s Bank of China (PBOC) Governor Zhou Xiaochuan said.
Imports and exports increased rapidly, fiscal income grew, and prices have been steady, Zhou said, according to a statement the central bank released on Saturday after he attended meetings of global finance chiefs this week in Washington. The effects of a campaign to rein in leverage are showing, and China will monitor and prevent shadow banking and real estate risk, he said.
China’s broadest gauge of new credit, released Saturday, exceeded projections, signaling that the funding taps remain open even as
the government pushes to curb
excessive borrowing.
“Positive progress has been achieved in economic transformation,” the statement said. “China will continue to pursue a proactive fiscal policy and a prudent monetary
policy, with a comprehensive set of policies to strengthen areas of
weakness.”
Zhou’s comments, delivered before a gathering of Group of 20 finance ministers and central bankers, come before the release of third-quarter gross domestic product, scheduled for October 19. Economists project a moderation to 6.8 percent growth from the 6.9 percent pace in the second quarter amid
government efforts to reduce
overcapacity and ease debt risk.
Zhou is also in Washington for meetings of the World Bank and International Monetary Fund, where officials expressed an increasingly upbeat economic outlook. He is scheduled to speak on a global economy panel Sunday with Federal Reserve Chair Janet Yellen, Bank of Japan Governor Haruhiko Kuroda and European Central Bank Vice-President Vitor Constancio.
The IMF this week increased its global growth forecast amid brightening prospects in the world’s biggest economies. It also raised its China growth estimate to 6.8 percent this year and 6.5 percent in 2018, up 0.1 percentage point in each year versus July.
Aggregate financing to the economy stood at 1.82 trillion yuan ($276 billion) in September, the People’s Bank of China said on Saturday, compared with an estimated 1.57 trillion yuan in a Bloomberg survey and 1.48 trillion yuan the prior month.
A report showed that exports and imports both accelerated. Growth is forecast to slow after a robust first half, when it started the year with the first back-to-back quarterly acceleration in seven years, then surprised economists by matching that 6.9 percent expansion again in the second quarter.
Meanwhile, the PBOC’s new tailored move to steer credit to small businesses, farmers and startups also indicates that the leadership remains vigilant about economic growth while also refraining from easing monetary policy across the board to contain overall leverage.
The PBOC said on September 30 it will reduce how much cash some banks must hold as reserves from next year, with the size of the
cut linked to lending to parts of the
economy where credit is scarce.
It has kept benchmark lending rate at a record low for almost two years.
“Growth in China is very strong,” Markus Rodlauer, IMF’s Asia and Pacific deputy director, said at the briefing. “There’s no need for expansionary fiscal and monetary policies.”
Zhou also told finance chiefs China encourages private-sector investment in Africa, and that it has expanded rapidly in recent years. “Experience shows a large demand of cross-country infrastructure in Africa, especially in the energy and power sector,” the statement said, adding that development banks have “huge potential” and can do more for the continent.