China’s central bank pledged on Wednesday to provide “more powerful” policy support for the real economy and maintain a “healthy” property market, as the rebound of the country’s industrial profits provided further signs of economic stabilisation.
“There will be a focus on expanding domestic demand, boosting confidence, speeding up a healthy economic cycle and providing more support to the real economy,” said the central bank, in an online statement on Wednesday.
The central bank convened its third quarter monetary policy meeting on Monday. Its statement came as China’s business environment and growth prospects have been questioned overseas.
The monetary authorities also highlighted plans, introduced in early September, to further support China’s faltering property market by implementing the government’s new policies on lowering mortgages.
The central bank will “push for the stable and healthy development” of a “new model for property sector development” by offering financial support to the building of basic infrastructure, urban-villages and social housing, it said.
Meanwhile, policymakers attempted to strike a positive note for the fast depreciating yuan in both onshore and overseas markets.
China’s onshore yuan slid to a 16-year low against the dollar in September, and came closest to the limit of the People’s Bank of China daily reference rate, which limits the currency’s allowed range by 2 per cent on either side, as it was down to 1.9 per cent on Monday this week.
The depreciation has sparked growing capital outflow fears, as China’s economy showed struggling signs of property slump, as well as weak consumer spending and exports.
The combined profits of medium and large industrial firms – defined as those with an annual operating revenue of more than 20 million yuan (US$2.7 million) – reported the first year-on-year rise so far this year.
August profits rose 17.2 per cent from a year earlier, compared to a fall of 6.7 per cent in July and a plunge of 19.2 per cent in March, according to data released on Wednesday by the National Bureau of Statistics.
January-August profits fell 11.5 per cent from the same period last year, compared to a decline of 15.5 per cent in the first seven months.
State-owned firms saw their fall of profits narrowed from 20.3 per cent to 16.5 per cent, while the fall of private players narrowed by 6.1 percentage points to 4.6 per cent in the first eight months.
August industrial output and retail sales data released by the statistics bureau earlier this month also indicated an initial stabilisation of the world’s second largest economy, encouraging JP Morgan and ANZ to raise their 2023 China forecast to 5.1 per cent from 5 per cent.