China’s noticeable economic slowdown in the latter half of 2021 is proving a test for the central bank’s policy mettle and has split economists on the subject of whether more aggressive action is required to avert a steeper downturn, reports Bloomberg. The People’s Bank of China (PBOC) is having to juggle several economic risks, pulling policy in different directions.
Growth is heading for lows not seen since 1990—excluding last year’s pandemic—factory-gate inflation is skyrocketing, while the currency is rallying on the back of record trade surpluses. On top of that, the US and Europe’s imminent scaling back of pandemic stimulus is squeezing China’s room to loosen policy.
The PBOC has refrained from any significant easing measures since its surprise cut in the reserve requirement ratio in July. It’s opted instead for a targeted approach: providing support to small businesses and green sectors, and relaxing some restrictions on property financing and mortgage lending.