Economist: China's monetary policy will not abruptly turn to easing

People in the global industry generally believe that although exports are hit by the European sovereign debt crisis, Chinese authorities may not cut interest rates during the year because the level of inflation is still much higher than the target range, and China’s domestic spending will become an important engine supporting global economic recovery.

Even if China's economic growth slowed to 9.1% in the third quarter, the pace of expansion of industrial output and retail sales has been even faster. The Chinese CPI data released last week showed that China’s inflation rate remained at a high level of 6.1%, clearly exceeding the 4% target ceiling given at the beginning of the official year.

Yao Wei, a Societe Generale SA in Hong Kong, said: "The latest data will not trigger a sudden change in China's monetary policy or fiscal policy, but in the future, the overall direction of the policy tends to be loose," he pointed out. , "The growth of consumer spending has remained good."

Economists expect that due to the worsening debt crisis in Europe, the export industry will encounter resistance, and small companies will also be trapped in financing difficulties. China may offer targeted support measures. JPMorgan Chase & Co. believes that the People's Bank of China will maintain the target interest rate unchanged for the rest of the year, but the authorities may adopt "selective easing measures," including ensuring SME loans and the government's affordable housing construction.

Xia Bin, a member of the PBOC's monetary policy committee, believes that economic growth is still "in good condition." He suggested that the deposit interest rate should be allowed to rise moderately to address the sharp decline in the growth of renminbi deposits and to avoid any impact on the real economy. He believes that in order to prevent a one-time increase in interest rates in the event of economic slowdown, causing unnecessary negative impact on the market, it is better to take advantage of market-oriented interest rate reforms and allow deposit interest rates to rise moderately.

In addition, official data released last week showed that China's import and export growth has slowed. In September, China's exports increased by 17.1% year-on-year to US$169.7 billion, down from the 24.5% YoY increase in August. The month's imports increased by 20.9% year-on-year to US$155.2 billion, which was lower than the 30.2% YoY increase in August.

Ministry of Commerce spokesperson Shen Danyang said on Wednesday (October 19) at a regular press conference that due to changes in the environment at home and abroad, especially the instability and uncertainties that have affected the development of China’s foreign trade over the past few months, four In the quarter and next year, the import and export situation in the first quarter of next year will be quite severe.

To limit economic overheating and inflation, the People’s Bank of China began to raise interest rates five times in a row last October, while the bank deposit reserve ratio is at a historic high.

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