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 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 liberalization 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.
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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" stabilized.
"Following Aug. 11, our original intention was to pursue market
reforms. But after that, we realized there was a relatively big
depreciation pressure (on the yuan), and so we decided to resolutely
stabilize the yuan," he said.
The PBOC was looking into leverage levels in the debt market, Yi
noted.
He said that China did not have exceptionally high debt levels, and
while the bank was not overly anxious about cutting the level of
leverage in the economy, the overall strategy is to stabilize
leverage levels.
“I want to especially mention this: I am now also focused on the
leverage level in China’s debt market,” he said.
(Reporting by Gui Qing Koh and Alexandra Harney; editing by Jeremy
Gaunt and Jason Neely)
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