China's growth target 'achievable' without aggressive stimulus: Central bank governor

Zhou Xiaochuan, governor of the People's Bank of China, speaks during a news conference on March 12, 2016.
Zhou Xiaochuan, governor of the People's Bank of China, speaks during a news conference on March 12, 2016. PHOTO: BLOOMBERG

BEIJING (AFP) - China can achieve its growth target without aggressive monetary stimulus, central bank governor Zhou Xiaochuan said on Saturday (March 12), while acknowledging numerous "difficulties and challenges" facing the world's second-largest economy.

"We will keep monetary policy stable and don't think it is necessary to take excessive monetary stimulus to achieve the (growth) target," he told reporters at a briefing on the sidelines of the National People's Congress, the Communist-controlled Parliament.

The government will keep liquidity "reasonably abundant" given the slowing growth momentum of the economy, Mr Zhou said.

"Currently we underline the downward pressures on the economy, which faces a relatively large number of difficulties and challenges," he said.

The Chinese economy grew at its slowest pace in a quarter century last year and Beijing last week cut its 2016 expansion target to 6.5 per cent to 7 per cent, down from "about 7 per cent" previously.

The global market remains concerned over the outlook of China's economy and analysts have questioned Beijing's ability to maintain growth while implementing reforms to transform the economic model to one that relies on consumption rather than government-driven investment and exports.

The central bank has cut interest rate six times since late 2014 and also reduced the amount of funds banks must set aside as reserves to boost lending.

Reflecting jitters over the prospects of the Chinese economy, the country has seen a flood of cash leaving in the past few months and its foreign exchange reserves, the world's largest, continue to decline.

Asked about the declines, Mr Zhou said such outflows were "not strange at all" given that China enjoyed massive inflows for many years.

"There is no need at all to rush to buy US dollars," he said.

China's foreign exchange reserves dropped US$28.6 billion to US$3.2 trillion at the end of February from the previous month, after falling US$99.5 billion in January and a record US$108 billion in December.