Fitch: China to keep prudent stance
Print Edition
CHINA will not expand credit indiscriminately to stimulate the economy after policy-makers decided to further ease monetary and fiscal policies last week, Fitch Ratings said yesterday.
Last Wednesday, the State Council announced in a statement a short-term stimulus to “support economic growth” with “more flexible fiscal and monetary policies” and to “ease financing difficulties,” Fitch said.
“The announcement stops short of reverting to indiscriminate credit expansion as a stimulus tool,” Fitch said. “It remains in line with targeted easing measures announced earlier in the year.”
Fitch said it does not see the statement as signaling the Chinese authorities may risk abandoning the objective of a more sustainable growth path for the economy.
“It is important to note that the statement continues to emphasize using “targeted” stimulus measures, which is a meaningful distinction from a broad-based credit easing,” the rating agency said.
“Other measures highlight continued support only for specific sectors such as agriculture and small and medium-sized enterprises, further indicating that the announcement is more in line with reinforcing existing reform strategies as opposed to reverting to a credit-fueled investment-growth model.”
Senior Chinese government officials, including Premier Li Keqiang, have indicated they were prepared for the economy to grow slightly below the official growth target of 7.5 percent if employment remained robust.
Over the weekend, the People’s Bank of China Governor Zhou Xiaochuan said at a meeting of the International Monetary Fund’s policy-setting committee that the Chinese economy will continue to grow steadily with inflation likely to stay mild.
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