BEIJING (Reuters) – China’s commitment to preventing the yuan’s exchange rate from experiencing overshooting risks remains steadfast, according to People’s Bank of China (PBOC) Governor Pan Gongsheng. His comments, reported by Financial News, a newspaper owned by the PBOC, underscore China’s cautious approach to its currency’s value.
The Chinese yuan has depreciated by over 5% this year, making it one of the poorest-performing Asian currencies. This depreciation is attributed to widening yield differentials with other major economies and an uneven domestic economic recovery.
Pan emphasized China’s intention to prevent the formation of one-sided and self-reinforced market expectations for the yuan, as he spoke at a financial forum in Beijing. He noted that despite losses against the US dollar, the yuan’s value against a basket of currencies remained relatively stable, with a slight appreciation against non-dollar currencies.
As of Wednesday, the yuan’s trade-weighted CFETS yuan basket index was at 98.49, marking a 0.18% decrease year-to-date, based on Reuters calculations using official data.
Furthermore, Pan reiterated that China possesses the capacity to maintain prudent operations of the foreign exchange market and keep the yuan’s value fundamentally stable, reasonable, and balanced.
China on Track to Achieve Growth Target Pan Gongsheng also commented on China’s economic outlook, stating that the country is expected to achieve its annual gross domestic product (GDP) growth target of 5% this year. He assured that China would continue to pursue a prudent monetary policy to support real economic growth.
He mentioned that growth momentum has recently improved, with steady recovery in production and consumption, overall stability in employment and consumer prices, as reported by the Securities Times.
China’s official economic growth target for the year is approximately 5%, and Pan stressed that monetary policy considerations would take into account cross-cyclical and counter-cyclical adjustments.
China has been striving to rejuvenate economic growth following a brief post-COVID-19 rebound that faltered due to a prolonged property market downturn and local government debt concerns. Economic indicators from October revealed unexpected growth in imports, while exports contracted at a faster rate.
Pan also announced that financial institutions would be encouraged to maintain stable financing channels through property credit and bonds to address real estate challenges. The central bank would provide liquidity support to regions with high debt levels when necessary.
Furthermore, he expressed a commitment to strictly controlling investments in new projects located in areas burdened with high debt levels, emphasizing a cautious and balanced approach to economic management.
