PBOC’s Wang calls for growth-boosting policy as yuan slumps to yearly lows

Wang Yiming, a member of the monetary policy committee of the People’s Bank of China (PBOC), call on the government to enact stronger policy measures to stimulate growth above 5% in the second quarter, per Bloomberg.

Key quotes

“Reaching that benchmark in the April-to-June period is critical if China is to meet a government gross domestic product growth target of about 5.5% for all of 2022.”

new challenges facing the economy, including the ongoing war in Ukraine and the risks of rising imported inflation, as well as the Federal Reserve’s aggressive interest rate hike plan.”

“Covid outbreaks in China have also hurt domestic demand and disrupted production and supply chains.”

“The government should make Covid controls more flexible to ensure logistics are smooth, and also strike a balance against relaxing restrictions too much or imposing excessively stringent curbs.”

Market reaction

USD/CNY is extending its vertical rise, now sitting at yearly highs of 6.5414, up 0.60% on the day. Worsening China’s economic growth outlook and fears that strict covid lockdown measures will spread to Beijing are weighing heavily on the domestic currency.

The Chinese yuan posted its worst week since 2015 after witnessing a sharp depreciation on Friday amid the widening US-China yield differential and growth concerns.