The People’s Bank of China (PBOC) says 6-7% growth will occur in the region over the next three to five years. That estimate was made just one day after the bank cut interest rates for the sixth time in less than a year.
Yi Gang, Vice Governor of the People’s Bank of China, appears to be aimed at reassuring investors that a high level of growth is still possible for a country that has experienced a tremendous slowdown in recent months.
“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.
Alongside lowered interest rates, the PBOC lowered the amount of cash that banks must hold as reserves.
Reuters notes that, “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.”
“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,” Yi said.
Interest rates will be kept as a reasonable level to reduce the corporate debt burden.
The country’s leaders also plan to set benchmark lending and deposit rates for the time being.
China’s economy in the July-to-September quarter grew 6.9 percent from a year earlier. This is the first time the country’s growth has fallen below 7% since the start of the global financial crisis.
“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,” Yi noted.
The PBOC was looking into leverage levels in the debt market, Yi noted.