Pan Gongsheng, Governor of the People's Bank of China, delivers a speech during the 2024 Lujiazui Forum in Shanghai, China, June 19, 2024.
Visual China Group |
BEIJING – People's Bank of China Governor Pan Gongsheng will speak to reporters on Tuesday along with two other financial regulators.
The relatively rare high-level press conference came after the U.S. Federal Reserve cut interest rates last week, beginning an easing cycle that theoretically gives China's central bank further room to cut rates and boost growth in the face of deflationary pressures.
Pan became PBOC governor in July 2023. During his first press conference as central bank governor in January, Pan said the PBOC would cut the amount of cash banks must keep on hand, known as the reserve ratio, or RRR. Such policy announcements are rarely made at such events and are usually disseminated through online publications and state media.
In March, he told reporters at China's annual parliamentary session that there was room for a further cut in the reserve requirement, a reduction widely expected in the coming months.
Unlike the Fed, which focuses on one benchmark interest rate, the PBoC uses a variety of interest rates to guide its monetary policy. On Friday, the PBoC did not change its benchmark interest rate, a benchmark that affects corporate and personal loans, including mortgages.
China's governance system also means policy is set at a much higher level than the financial regulators who spoke on Tuesday, who called for such high-level meetings in July to meet full-year growth targets and boost domestic demand.
While the PBoC has kept the benchmark interest rate unchanged since the Fed's rate cut, it has cut the short-term interest rate that determines the money supply. On Monday, the PBoC cut the 14-day reverse repo rate by 10 basis points to 1.85 percent, but did not cut the 7-day reverse repo rate, which was cut to 1.7 percent in July. Pan has indicated that he wants to make the 7-day rate the benchmark rate.
China's economic growth has slowed, held back by the real estate crisis and low consumer confidence. Economists are calling for more economic stimulus, especially at the fiscal level.
“The easing of monetary, fiscal and housing policies has been slow and gradual over the past year. This type of easing has in turn allowed various negative feedback loops to develop in the economy,” Hui Shan, chief China economist at Goldman Sachs, and a team said in a September 22 note.
Their analysis found that the issuance of local government bonds serves more to offset budget deficits than to promote additional growth.
Other high-level regulators speak
Also speaking at Tuesday's press conference will be Li Yunze, minister of the National Financial Regulatory Administration, and Wu Qing, chairman of the China Securities Regulatory Commission.
The National Financial Supervisory Authority was established last year as part of the restructuring of Beijing's financial regulatory system. It replaced the banking and insurance regulators and expanded their roles to include overseeing investor protection and regulating financial holding companies, both of which were previously under the securities regulator and the central bank, respectively.
Wu was appointed chairman of the Securities and Exchange Commission in early February following a stock market crash. He was previously head of the Shanghai Stock Exchange.