SHANGHAI: China will promote a sustained economic recovery, focusing on expanding domestic demand, while fending off financial risks, People’s Bank of China Governor Pan Gongsheng said in a report published on Saturday.

The central bank will make its policy more “precise and forceful”, while guiding financial institutions to cut real lending rates and reducing financing costs for firms and individuals, Pan said in the report published on the bank’s website.

The report is significant because it is the first time the governor has commented on policy after the publication of third-quarter economic data. It outlines the authorities’ near-term priorities and was delivered to the country’s parliament.

Pan said efforts would be made to activate the capital markets and boost investor confidence.

He also pledged to “implement macro policy adjustments in response to the changes in the economic situation, effectively strengthen financial supervision, focus on expanding domestic demand, boosting confidence and preventing risks, and promote a sustained recovery in the economy”.

China’s economy grew at a faster-than-expected rate in the third quarter, while consumption and industrial activity in September also surprised on the upside, suggesting a recent flurry of policy measures is helping bolster a tentative recovery.

The country will keep yuan stable, prevent the risk of abnormal fluctuations in cross-border fund flows and maintain the stability in the foreign exchange market, Pan said.

It will steadily push forward its yuan internationalisation scheme, establish a risk warning and control system for overseas investment and safeguard the country’s foreign currency assets, he added.

It will also guide financial institutions to help resolve local government debt risks, including debt risks of local government financing vehicles, he said.

Pan also said in the report China would resolve the default risk of bonds of big real estate enterprises, preventing risk contagion in stock, bond and foreign exchange markets, and ensuring the stable operation of financial markets.

Published in Dawn, October 22th, 2023