China needs more stimulus to boost growth, PBOC paper says

The People's Bank of China unexpectedly cut its policy interest rates on Aug 15, 2022. PHOTO: REUTERS

BEIJING (BLOOMBERG) - China needs to roll out more stimulus to boost economic growth as the recovery is not solid and its momentum shows signs of slowing, according to Financial News, a newspaper backed by the central bank.

In a front-page report on Tuesday (Aug 16), the newspaper said Beijing should introduce new pro-growth policies at the appropriate time to keep growth within a reasonable range, citing China Minsheng Bank chief economist Wen Bin.

The authorities should place more emphasis on expanding domestic demand and stabilising employment and prices, Dr Wen was quoted as saying. Those policies, if introduced, could also help further boost the confidence of all parties, he added.

The People's Bank of China (PBOC), the nation's central bank, unexpectedly cut its policy interest rates on Monday shortly before key data showed that the economy weakened in July due to a worsening property slump and continued Covid-19 lockdowns.

The youth unemployment rate hit a fresh record of 20 per cent, highlighting the pressure that Beijing faces to stimulate growth and maintain stability in the society.

The Securities Times said in a separate report on Tuesday that the PBOC's surprise rate cut may be the first in a series of policies to stabilise growth in the second half of the year.

Besides monetary policies, China should also use more fiscal stimulus to boost domestic demand, according to the report. In addition, more industrial policies and local property market measures are crucial to drive the recovery in production and consumption, it said, adding that Chinese banks are expected to cut the loan prime rates this month following the PBOC's move on Monday.

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