China’s central bank vows supportive monetary policy but dismisses dramatic easing measures

PBOC governor Pan Gongsheng tells Lujiazui Forum that treasury bond purchases are in the works, clarifies these do not equate to Western quantitative easing

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Pan Gongsheng, governor of the People’s Bank of China, speaks during the Lujiazui Forum in Shanghai on Wednesday. Photo: Bloomberg

Published: 3:51pm, 19 Jun 2024

China’s central bank governor has pledged to continue accommodative monetary policies to jolt the economy, but he also doubled down on long-maintained intentions to avoid Western-style quantitative loosening.

Speaking at the 15th Lujiazui Forum in Shanghai on Wednesday, Pan Gongsheng said the People’s Bank of China (PBOC) will avoid drastic policy changes while taking into account other objectives such as risk controls and promoting a moderate rise in consumer prices.

Meanwhile, Pan revealed for the first time that the PBOC is in talks with the finance ministry for treasury bond purchases in the secondary markets, emphasising that it will be a gradual process and that details have yet to be worked out.

“It should be noted that incorporating bond trading into the policy toolbox does not mean quantitative easing,” the governor said at the forum, which is regarded as an influential finance industry gathering and which represents Shanghai’s ambitions to become a global financial centre.

Pan said it should be viewed as a liquidity-management tool – one that will be utilised with others to foster a suitable liquidity environment.

“This process is gradual, since the pace of bond issuance, maturity structure and custody system need to be studied and optimised,” he explained.