China’s central bank governor calls for economic prudence as his retirement nears
- The People’s Bank of China’s Yi Gang and his analyses on hot-button issues featured prominently in an article for the Journal of Economic Research
- Central bank will need to consider how to better align its monetary policy with Beijing’s adjustments to fiscal, social and industrial policies
With the entire world likely facing long-term economic adjustments, China must keep its monetary policy stable and consistent to stay on the fast track to strategic development in a global race, according to the governor of the central bank.
Yi Gang, who is widely expected to step down soon as the People’s Bank of China (PBOC) governor, flagged some concerns on hot-button issues and offered advice in a recent article for the Journal of Economic Research.
He wrote about how the world’s second-largest economy should maintain positive interest rates in line with its potential growth – not like the big stimulus and ultra-loose monetary policies that triggered inflation and market volatility in the West.
Yi would also like to see greater market-driven force and more flexibility in the yuan’s exchange rate regime, which could help China absorb external shocks, such as from aggressive US interest rate hikes.
“Maintaining positive interest rates is beneficial to providing positive incentives for the market, in line with the Chinese tradition of saving, and conducive to long-term social development,” Yi said.
