China’s central bank sees little need for more emergency stimulus this year

CNBC reports that China’s central bank isn’t planning much more stimulus for the country as its economy recovers from the coronavirus shock, policymakers said.

″(Some recent) policies and measures were made in response to the coronavirus outbreak, and once they completed their mission they have exited,” Guo Kai, deputy director of the monetary policy department of the People’s Bank of China, told reporters.

As an example, he pointed to two special loan programs worth a combined 800 billion yuan ($114.29 billion) that had completed their respective purposes of supporting production of medical supplies and resumption of work.

“In the next half of the year, the economy will return to normal, and the role of traditional monetary policy may become more obvious,” Guo said at the press briefing. “We have entered a more normal state.”

During the first three months of the year, China’s economy contracted by 6.8% after more than half of the country extended a Lunar New Year holiday shutdown by at least a week in February in an effort to limit the spread of Covid-19. The disease first emerged late last year in the Chinese city of Wuhan.

The outbreak stalled within the country by mid-March, while accelerating its spread overseas in a global pandemic that has since infected more than 12.8 million people worldwide and killed more than 567,000 people. The world economy is expected to fall into a recession this year as other governments have limited social gatherings. That drop could significantly affect demand for exports from China, which is still generally expected to eke out national growth this year.

The central bank’s statistics department head Ruan Jianhong said Friday that out of 10,000 enterprises surveyed nationwide, 90.7% of those in the services industry had reopened as of June 15. For those in industrial work, utilization of equipment was at least the same as the average level of the second quarter last year, Ruan said. 

China is set to release second-quarter GDP and other key economic data this week.