BEIJING (AP) — In a new effort to dispel anxiety about China’s cooling economy, the central bank governor said Saturday the country can hit this year’s official growth target and Beijing has no need to weaken its currency to boost sagging exports.
Zhou Xiaochuan’s comments at a news conference during China’s national legislature add to a high-level public relations campaign by Beijing to reassure global financial markets about the stability of the world’s second-largest economy following stock and currency turmoil.
Zhou expressed confidence the economy can hit its official growth target, which the ruling Communist Party lowered this year to 6.5 to 7 percent from last year’s "about 7 percent." Growth fell last year to a 25-year low of 6.9 percent, though that still was among the world’s highest.
Economic growth has declined steadily over the past five years as Beijing carries out a marathon effort to nurture domestic demand and reduce reliance on a worn-out model based on trade and investment.
An unexpectedly sharp decline over the past two years prompted fears of a politically dangerous spike in job losses and prompted Beijing to shore up growth with mini-stimulus measures based on higher spending on building roads and other public works. But officials including Premier Li Keqiang have said longer-term gains have to come from reform, not more spending.
Productivity is improving and planned economic reforms should spur Chinese consumer demand, "so I believe we can realize these economic growth targets," said Yi Gang, a deputy governor who appeared with Zhou at the news conference.
He was responding to a question about whether Beijing might be forced to loosen credit controls in order to meet its target, potentially increasing rising debt levels that have caused unease in financial markets.
If the economy performs as expected, Zhou said "there would be no need to have stimulus from monetary policy."
The ruling party’s reputation for skillful economic management has been battered over the past year by a stock market collapse that wiped out some $5 trillion in share value and turmoil over China’s currency, the yuan.
The premier and other officials have spent the past three weeks giving emphatic public assurances their economy is under control.
Zhou, 68, is respected abroad and is seen as an advocate of pragmatic, market-based financial reforms aimed at making China’s state-dominated economy more efficient. He was retained in his job past the normal retirement age of 65 in what appeared to be an effort by a new generation of Chinese leaders who took power in 2012 to reassure financial markets of policy continuity.
Also Saturday, Zhou tried to dispel fears Beijing might weaken its yuan to boost exports. That concern spread after a surprise introduction in August of a new mechanism to set the yuan’s state-controlled exchange rate led to a decline in its value against the dollar. Beijing spent tens of billions of dollars to slow the decline.
Pointing to China’s $600 billion global trade surplus last year, Zhou said Chinese exporters are competitive and don’t need artificial support.
"We don’t have to resort to exchange rate measures," he said.