China’s central bank governor says there’s room to cut banks’ reserve requirements

BEIJING — China’s central bank governor said there was room to further cut banks’ reserve requirements, and pledged to utilize monetary policy to “mildly” prop up consumer prices.

This is part of Beijing’s broader economic policy “adjustments” so the economy can hit its growth target of around 5% for the year, while adhering to a 3% fiscal deficit. Plans to issue “ultra-long” special bonds for major projects will also help meet that target.

Pan Gongsheng, governor of the People’s Bank of China, made these comments on Wednesday as part of a joint press conference with other key leaders of the country’s economy and financial sector on the sidelines of this year’s annual parliamentary meetings.

China’s growth target and economic plans for the year, released Tuesday in an annual government work report, fell short of many analysts’ expectations for further stimulus and raised questions about how China would be able to achieve another year of growth that’s around 5%. National GDP rose by 5.2% in 2023, up from a low base in 2022.

For investors in the near term, the primary concern remains how much China’s policymakers are focused on ensuring growth.

“In order to achieve this [target of around 5%], the government work report proposed many major policies,” Huang Shouhong, head of the report’s drafting team and director of the State Council’s research office, told reporters on Tuesday in Mandarin, translated by CNBC.

“If China’s economy encounters unexpected shocks in the future, or the international environment undergoes unexpected changes, we still have tools in reserve in our policy toolbox,” he said.

This is a developing story. Please check back for more updates.