Experts say monetary measures to help boost growth in 4th quarter

China is ramping up monetary support to consolidate the country's economic recovery, with the property market showing signs of a pickup while pro-investment measures are set to take effect in the fourth quarter, said Yi Gang, the country's central bank governor.

"China's monetary policy will stay accommodative to support the real economy," Yi said in an interview at the three-day Hong Kong Monetary Authority's Global Financial Leaders' Investment Summit, which opened on Tuesday. The interview was published on Wednesday by the People's Bank of China, the nation's central bank.

Yi said the PBOC is working on supporting investment in capital expenditure and infrastructure, with the effects expected to show up in fourth-quarter economic data, alongside the central bank's efforts to provide ample liquidity, lower financing costs and offer structural support to areas such as agriculture, small businesses and green development.

The central bank is supportive of the healthy development of the real estate sector, and sales and lending in the sector have seen marginal improvement, Yi said. "With ongoing urbanization in China, we hope the housing market can achieve a soft landing."

Despite facing some pressures, the Chinese economy remains broadly on track and can maintain a reasonable potential growth rate thanks to the continuous urbanization and rising demand of middle-income consumers, which will keep the purchasing power and value of the renminbi stable, Yi said.

Experts said stepped-up monetary support to boost investment is expected to buffer the downside risks of real estate weakness and COVID-19 uncertainties, helping China's economic growth to pick up in the fourth quarter.

Zhou Maohua, an analyst at China Everbright Bank, said structural monetary support, including the new relending facility to support businesses in upgrading their equipment, will drive up investment in the manufacturing and infrastructure sectors.

Full-year growth in manufacturing investment may accelerate to 11.7 percent year-on-year, up from 10.1 percent in the first three quarters, Zhou said, adding that more policy support is needed to sustain the recovery in domestic demand and help local authorities stabilize the housing market.

The country's outstanding loans to real estate development reached 12.67 trillion yuan ($1.74 trillion) as of September, up 2.2 percent year-on-year, accelerating from a 0.2 percent decrease seen a quarter earlier, central bank data showed.

Meanwhile, private property enterprises issued 11.74 billion yuan in debt financing instruments since the beginning of August, up 173 percent year-on-year, according to market tracker Wind Info.

Still, officials and experts stressed the need to handle the pace of future accommodative steps properly and avoid excessively aggressive stimulus from deflating the renminbi amid monetary tightening in the United States and globally elevated inflation.

PBOC Governor Yi said in an article that the central bank should well manage total money supply and insist on conventional monetary policy, which will facilitate reasonable growth in people's incomes and strengthen the competitive edge of renminbi assets, Securities Times reported on Wednesday.

Conventional monetary policy refers to using standard tools like interest rate adjustments to help iron out business cycles, in contrast with unconventional policy that features aggressive campaigns like quantitative easing.

Lian Ping, chief economist at Zhixin Investment, said the room for further relaxation in China's monetary policy should be prepared, given the likelihood of a global economic recession in 2024 amid US monetary tightening.

Yi said in the interview on Wednesday that loan rates currently stand at 4 to 5 percent in China, adding that the country will participate actively in international discussions on rules, regulations and standard setting to expand institutional financial opening-up.