China is poised to achieve its growth target of around 5% for the year and is expecting even stronger economic performance in 2024, according to Pan Gongsheng, a top official from the People's Bank of China (PBOC). Speaking at a conference in Hong Kong today, Pan highlighted improving retail sales and an uptick in private investment outside the real estate sector as signs of a resilient economy.
The PBOC is set to maintain a supportive monetary policy stance, despite mixed economic signals in the fourth quarter, particularly from the contracting property market. While acknowledging that the high growth rates of the past are no longer sustainable due to the economy's maturity, Pan identified renewable energy as a new driver for economic expansion.
During his speech in Hong Kong, which was organized by the Hong Kong Monetary Authority (HKMA) and the Bank for International Settlements (BIS), Pan discussed financial cooperation between mainland China and Hong Kong, reinforcing the latter's status as a key financial hub. These talks included senior officials from major financial institutions such as HSBC Holdings Plc (LON:HSBA). and Goldman Sachs Group Inc (NYSE:GS).
In response to the downturn in the property sector, the PBOC is considering significant support measures, including a potential reduction in banks' reserve requirements to improve liquidity. Economists anticipate that the central bank might also issue additional sovereign bonds to finance infrastructure projects. However, interest rate cuts are likely to be delayed until next year, given the recent stabilization of the yuan and concerns about shrinking profit margins for banks.
Pan's remarks come at a time when China is navigating through various economic challenges, including the need to transition to more sustainable growth avenues while providing sufficient support to the sectors that are currently lagging. The central bank's policy decisions in the coming months will be crucial in shaping the country's economic trajectory.
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