China’s cenbank to keep liquidly ample, step up finance support for key sectors

HONG KONG (Reuters) -China’s central bank on Friday said it would keep liquidity reasonably ample and step up financing support for key sectors and weak links of the economy.

The People’s Bank of China (PBOC) will meet the reasonable financing demands of the real economy while not resorting to flood-like stimulus, it said in its fourth-quarter implementation report.

The world’s second-largest economy has shown signs of slowing after a rapid rebound from the COVID-19 slump, with concerns about the financial health of property developers and the rapid spread of the Omicron variant clouding the outlook.

“We will improve the money supply mechanism, maintain reasonable and sufficient liquidity, guide financial institutions to vigorously expand loan lending and enhance the stability of total credit growth,” the central bank said.

The PBOC said it would keep growth of money supply and total social financing basically in line with nominal economic growth.

The weighted-average lending rate was at 4.76% in December, down 27 basis points from a year earlier, the central bank said.

New bank lending in China more than tripled in January from the previous month, hitting a record high, as the central bank seeks to shore up slowing growth.

The PBOC has cut reserve requirement ratios for banks and benchmark lending rates, with more easing steps expected.

The central bank will also fend off systemic financial risks and will not use real estate as a short-term method of stimulating the economy, it said.

It will keep both the macro leverage rate and the yuan exchange rate basically stable, it added.

(Reporting by Kevin Yao; Additional reporting by Twinnie Siu and Ella Cao; Editing by Philippa Fletcher and Nick Macfie)