Yi Gang, the governor of the Central Bank of China has said that Beijing must maintain a normal monetary policy for as long as possible as their economic growth was still in a decent range and the inflation was mild overall.
The Governor of the People’s Bank of China, Yi Gang wrote in an article that was published by a prominent Communist Party’s theoretical journal called Qiushi that China shall not be resorting to quantitative easing regardless of the fact that the monetary policies of the major economies in the world are approaching almost zero interest rates.
Yi said that they would not allow the money that is held by Chinese citizens to become worthless. The maintenance of positive interest rates along with a yield curve inclining upwards are usually quite conducive towards the economic entities, and are in line with the people’s saving culture of China, and hence is very beneficial for the sustainable development of the Chinese economy.
He reiterated that the central bank shall be continuing the implementation of prudent monetary policy, the conduction of counter-cyclical adjustments, improvement of monetary policy transmission and also keeping liquidity reasonably ample.
The economic growth of China has declined to an almost 30-year low in the 3rd quarter of this year and the industrial profits have continued to reduce. Speculation has been mounting that Beijing must roll out their stimulus at a faster pace and with more aggression, even if it came with the risk of heavy debts.
The rate of exchange of China’s yuan is determined by the supply and demand. Yi said that they shall not use the yuan as a tool and that they refused to resort to the competitive devaluation of the yuan.