BEIJING: China will be able to keep annual economic growth at around 6-7 percent over the next three to five years, a top People’s Bank of China (PBOC) policymaker said on Saturday, a day after the bank cut interest rates for the sixth time in less than a year.
The comments from Yi Gang, vice governor of the People’s Bank of China, appeared to be aimed at reassuring investors this level of growth, China’s slowest pace in two decades but still faster than other major economies, is the Chinese economy’s “new normal”.
“China’s future economic growth will still be relatively quick. Around seven, six-point-something. These will all be very normal,” he told a conference in Beijing.
As well as cutting interest rates on Friday, the PBOC lowered the amount of cash that banks must hold as reserves.
Both moves were bids to jumpstart growth in China’s slowing economy, a drag on global growth that has been of major concern in emerging markets and other leading economies.
Monetary policy easing in the world’s second-largest economy is at its most aggressive since the 2008/09 financial crisis, as growth looks set to slip to a 25-year-low this year of under 7 percent.
Yi said China in the future would lower the reserve requirement ratio for banks, the amount of cash that major lenders need to keep on hand – at a “normal” pace.
“Our reserve requirement ratio is still at a relatively high level so there is still room to lower the RRR. In future, we will proceed to lower the RRR at a normal pace,” he said.
Yi said the PBOC planned to keep interest rates at a reasonable level to reduce the corporate debt burden, and noted that interest rate liberalisation does not mean that the central bank would reduce regulation of rates.
China will also continue to set benchmark lending and deposit rates for some time, he said, but these rates would not restrict market pricing.
Data released on Monday showed China’s economy in the July-to-September quarter grew 6.9 percent from a year earlier, dipping below 7 percent for the first time since the global financial crisis.
Yi noted that China’s stock market, which has fallen sharply since June, had completed most of its adjustments and that the yuan, which was buffeted in the wake of a surprise devaluation in early August, had “basically” stabilised.