The People's Bank of China (PBOC) will extend the use of its new macro prudential assessment (MPA) mechanism, currently targeting banks, to other financial institutions, the central bank's governor Mr Yi Gang, has said.
He also said that the PBOC would “strengthen expectation guidance and pay special attention to risk contagion across markets”.
Mr Yi made his comments in a speech at Tsinghua University in Beijing last Thursday, after the Communist Party’s Politburo signaled that it would continue with its campaign to curb financial risk into 2019 while pursuing high-quality growth.
China’s economy is facing increasing downward pressure, and monetary policy will continue to be supportive, Mr Yi said. Predictions are that China's economic growth will slow to 6.2% from 6.6% this year.
According to a Bloomberg report, Mr Yi said, “China won’t have double-digit growth like in the past years,” and it’s stayed around its potential growth rate in recent years.
Policy has been challenged by external shocks such as trade friction and other market turbulence, Mr Yi said, adding that the contraction in shadow banking has contributed to slower infrastructure investment.
Growth fell to a decade-low of 6.5% in the third quarter of 2018 and is expected to slow further as uncertainties remain high over the trade negotiations between Beijing and Washington, with the trade war currently two weeks into the 90-day truce agreed on 1 December.
The latest official data show that fixed-asset investment growth firmed, expanding by 5.9% in the first 11 months of the year, and the surveyed jobless rate dropped marginally to 4.8%. However, retail sales and industrial production slowed. Industrial production growth decelerated to 5.4%, below all 38 economists’ estimates. Retail sales, formerly a pillar of support for the economy, posted the weakest performance since May 2003, rising by 8.1% from a year earlier. Car sales declined, as did sales of smartphones and other communication devices.
Mr Mao Shengyong, a spokesman for the National Bureau of Statistics, said though, "Those major economic indicators, in general, remained relatively stable", noting the economy performed within a reasonable range despite weakening global growth momentum.
"There is no doubt that China will fulfill this year's growth target of around 6.5%," he said, adding that the economy will have a sound foundation in 2019.