PBOC Governor: China's Economy Is In Good Shape
People's Bank of China governor Zhou Xiaochuan confirmed to China's trading partners that Beijing will not weaken yuan and that Beijing has enough resources to support the economy. At the G20 summit, held in Shanghai from February 26-27, policy makers will discuss global weakness, including drop in the value of currencies, interest rates, trade and oil prices.
On Friday, Chinese policymakers informed global financial leaders that the world's second largest economy is still in good shape. At the same time, China's economy looks to manage expectations around the speed of economic reforms in the country. The PBOC governor is confident to say that the country will not again devaluate its currency to support the economy, as reported by CNBC.
"We are building an interest rate corridor, and people are getting used to this gradually," he said. The corridor, he said, would allow interest rates to fluctuate in a set range, based on risk and demand for credit.
After Mr. Zhou's comments, the Shanghai stock market gained 1% on Friday that tumbled 6.4% on Thursday. Renminbi's value remains steady on Friday without the uniformity in Hong Kong trading even though it still dropped a little against the dollar for the day. However, he did not give any specifics on when he might next offer the next understanding of Chinese monetary policy. He also did not reveal any plans to follow other leading central banks like the Federal Reserve, Bank of Japan and European Central Bank in conducting regular information after important policy decisions, according to The New York Times.
During the news conference, Mr. Zhou spoke in Chinese but present his speech in English to the investors, assuring them that China's economy is in good health. He stated that the central bank has enough resources to utilize monetary policy to buffer the economy and suggested of probable interest rate cut to come. In addition, the government would implement a wider budget deficit in 2016 with plans to decrease economic overcapacity and describe the exchange rate for the currency yuan or renminmbi, to be 'broadly stable again', according to Market Watch.
With the assurance Mr. Zhou gave to the finance officials and investors, the country is hoping that many capitalists will invest in the country. The PBOC governor is confident to say that China's economy is still perfectly healthy.