China will keep its monetary policy stable and implement normal policy as the government believes inflation is under control and the economy’s performance is reasonable, central bank governor Yi Gang said on Thursday.
Consumer price inflation in China this year is expected to trend upwards before easing, and the consumer price index is expected to rise by less than 2% this year, Yi said at the meeting. ‘a forum. Earlier this year, Beijing said it aims to cap consumer inflation at around 3% in 2021.
China on Wednesday announced a 9% year-on-year increase in the producer price index in May, the fastest in nearly 13 years, driven by soaring commodity prices. Many economists have said that the rapid increase in ex-factory prices, if continued, would be passed on to consumers and raise the CPI.
Mr. Yi said that “the short-term rise in global inflation this year has become a fact,” and the authorities should not underestimate the risks associated with price changes.
He said China’s aging population, which leads to increased savings and decreased spending, would lower prices, while Beijing’s efforts to reduce carbon emissions would push prices up.
The two opposing forces can help stabilize prices in China, he said.
At the same forum, China’s chief banking and insurance regulator Guo Shuqing called on the country’s banks to increase their provisions for bad debt losses and speed up disposals of bad assets amid the backdrop of rebound in bad debts within the banking system.
Real estate bubbles, debt service difficulties for many local government funding platforms and loans to small businesses affected by the coronavirus pandemic last year will add to credit risks for Chinese banks, Mr. Guo.
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