A clerk counts cash at a bank in Huaibei, Anhui province. [Photo provided to China Daily]
China's central bank said Tuesday that it will increase counter-cyclical adjustments, further deepen the reform of the loan prime rates and push for lower real lending rates.
Yi Gang, governor of the People's Bank of China (PBOC), said the country's economic fundamentals for sustained sound growth remained unchanged despite uncertainties, reiterating the central bank will pursue a prudent monetary policy in a more flexible and appropriate way.
The central bank vowed to strike a balance between epidemic containment, economic activity restoration and risk control, enhance counter-cyclical adjustments and steadily push forward work on defusing risks, Yi said in an interview with the Financial News and China Finance, the PBOC-affiliated newspaper and magazine.
Yi noted the PBOC will use a variety of monetary policy tools and develop new ones to maintain ample liquidity and ensure M2 money supply and aggregate financing grow at notably higher rates than last year.
The COVID-19 epidemic has dealt a heavy blow to China's economic and social development, with economic growth contracting 6.8 percent in the first quarter of 2020.
To bolster the real economy, the PBOC lowered the reserve requirement ratio for financial institutions three times in the first five months this year, releasing a total of 1.75 trillion yuan (about $245.44 billion) into the banking system.
Yi warned the country's banks may face a rising non-performing loan ratio and pressure to dispose of bad debts, adding that the country will support banks, especially small and medium-sized lenders, to replenish capital through multiple channels and improve management to enhance their capacity to handle bad loans.
