Price stability is China’s monetary policy priority, central bank governor Yi Gang said in a video address at the 2022 annual conference of the Boao Forum for Asia (BFA), adding that agricultural production and the production and import of energy such as coal, oil and gas are the focus of financial services.
Yi, Governor of the People’s Bank of China (PBC), delivered a speech via video link at the BFA 2022 on Friday during a session focusing on global inflation, interest rate hikes and economic stability.
BFA 2022 is being held as the global economy faces an uphill battle in its recovery from the COVID pandemic, global supply chain issues and the Russian-Ukrainian conflict, all of which have contributed to rising prices. grain and fuel prices, combined with a wave of inflation that hit many countries, while the withdrawal of support policies by some developed economies caused ripple effects.
Yi noted that China’s grain production and energy supply are crucial for price stability in 2022, while external shocks have affected the country’s financial market and the domestic COVID-19 situation is exerting a downward pressure on growth.
Agricultural production and the production and import of energy such as coal, oil and gas are the focus of financial services, Yi said, as long as grain production and energy supply remain stable, the inflation will be kept within a reasonable range.
China’s monetary policy is accommodative and in a comfortable range, Yi said, noting that the PBC stands ready to support small and medium-sized enterprises (SMEs) by using more instruments if necessary.
China’s consumer price index came in at 1.1% in the first quarter while the producer price index reached 8.7%. In contrast, inflation in the United States is at its highest level in 40 years and the Eurozone recorded record CPI growth of 7.5% in March.
Yi said accommodative monetary policy, which includes inclusive lending to SMEs and support for vulnerable groups affected by COVID, helped ensure a strong economic start for China in the first quarter. China’s economy grew 4.8% in the January-March quarter, a slight improvement from the last quarter of 2021.
On Monday, the PBC also announced 23 policy measures to support the real economy.
At the end of March, the balance of inclusive loans to medium, small and micro enterprises increased by 25% year on year to reach 21 trillion yuan ($3.25 trillion).
To support the national economy under the impact of COVID, the PBC said in March that it would provide over 1 trillion yuan to the central government in additional fiscal support, equivalent to 1% of China’s GDP. .
At a virtual meeting of G20 finance ministers and central bank governors on Wednesday, Yi said China will flexibly use a variety of monetary policy tools to increase support for the real economy.
The IMF on Tuesday cut its forecast for global economic growth for 2022 by 0.8 percentage points from its January forecast to 3.6%, citing shock waves from the Russian-Ukrainian conflict.
The IMF also lowered its growth forecast for China this year to 4.4%.