China to provide necessary support for economic recovery

China’s monetary policy will provide the necessary support for the country’s economic recovery in 2021, a vice governor at the People’s Bank of China (PBOC) said Friday.

Backed by tough coronavirus containment measures and emergency relief for businesses, the world’s second-largest economy has basically recovered to pre-pandemic levels, but a resurgence of infections worldwide and in parts of China itself is keeping policymakers cautious.

China’s prudent monetary policy will be more flexible, targeted and appropriate this year, Chen Yulu told a news conference, adding that the central bank will prioritize policy stability and avoid making sudden shifts,

Chen also said the central bank will prevent big fluctuations in the country’s asset prices through macro-prudential policies.

China’s weighted average corporate lending rate was 4.61% at end-2020, down 51 basis points from a year ago, Chen said, reflecting authorities’ drive to bring down costs for cash-strapped businesses.

Sun Guofeng, head of the monetary policy department of the PBOC, told the same briefing that two-way fluctuations in the yuan currency will become normal going forward.

The central bank will keep yuan basically stable on a reasonable, balanced level, Sun said, reiterating the current stance.

The yuan gained nearly 7% against the U.S. dollar in 2020 and has continued to rally into the new year, though there have been signs recently that policymakers are growing uneasy over its rapid gains.

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