China has said it would “fine-tune” its monetary policy amid “global systemic risks”, raising hopes of a relaxation of tight credit as growth in the world’s second largest economy slows.
The nation’s central bank also warned the eurozone crisis could “lead to global systemic risks if it spreads more to core countries,” just as the Asian powerhouse suffers from a fall in exports due to lower demand abroad.
“The People’s Bank of China will... at an appropriate time and in moderate degree pre-emptively adjust and fine-tune (the monetary policy),” it said in a statement, adding it would do so according to changes in the global economy.
China’s economic growth eased to 9.1 per cent in the third quarter from 9.5 per cent in the second quarter due to government measures to tame inflation and economic turbulence in Europe and the US.
The central bank statement comes after the International Monetary Fund yesterday warned that China’s financial system is at risk from bad loans, booming private lending and sharp falls in property prices.
The Washington-based lender blamed “heavy” government involvement in the country’s banks and watchdogs for reducing market discipline and corporate governance.
Beijing, anxious about surging inflation, has been pulling on a variety of levers to curb consumer and property prices in the past year, including restricting the amount of money banks can lend and hiking interest rates.
The measures appear to be taking effect — inflation slowed sharply in October from the previous month, property sales have declined in some cities and output from the country’s millions of factories and workshops has slowed.