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China’s monetary policy mix more ‘effective, obvious’ than Western-style quantitative easing, focused on economic goals

  • Deputy central bank governor Xuan Changneng says Beijing’s monetary policies are ‘effective and obvious when compared with foreign central banks’
  • Analysts say the PBOC is under pressure to clarify its comments in December about implementing flexible but accommodating monetary policy

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Xuan Changneng during the Boao Forum for Asia Annual Conference in 2021. Photo: Getty Images
Frank Chenin Shanghai

A senior central bank official has hinted that China would not adopt Western-style quantitative easing, saying Beijing’s mix of liquidity tools and credit allocation is more effective in reflating the national economy.

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“The pass-through effect of the [central bank’s] monetary policies is effective and obvious when compared with foreign central banks,” Xuan Changneng, deputy governor of the People’s Bank of China (PBOC), said on Thursday without specifying any overseas agencies.

“The credit growth rate is also maintained at a level conducive to achieving our economic goals,” he added, citing that the PBOC has used its 45 trillion yuan (US$6.2 trillion) of assets to encourage 244 trillion yuan of commercial bank loans for the economy.

Xuan’s comments came at a time of increasing calls for stronger policy support to achieve this year’s “around 5 per cent” economic growth target, but while Beijing’s financial system is heading in a different direction under President Xi Jinping’s financial superpower vision.

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Beijing previously complained about the unprecedented monetary loosening in the United States in 2020, which was aimed at fighting the effects of the coronavirus pandemic, but led to worldwide inflation.

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