China vows prudent monetary policy as Xi heralds new normal

Chinese President Xi Jinping

China’s ruling Politburo said it will maintain a “prudent” monetary stance and keep growth within a reasonable range in 2015, signaling it will hold off major changes at an economic policy meeting expected this week.
While China will see difficulties in 2015, economic growth is showing resilience and potential, giving the government plenty of room to maneuver, the official Xinhua News Agency said in a summary of the meeting on Friday.
The language from the statement echoed remarks Chinese President Xi Jinping made at a meeting of the Asia-Pacific Economic Cooperation forum last month, when he promoted a “new normal” of slower growth and a greater focus on environmental protection, even with a property downturn weighing on the economy. The government cut interest rates last month as China is headed for its slowest annual expansion since 1990.
“The Chinese government has been repeating the same policy line over a number of years now, but we have seen a few different cycles,” said Chang Jian, chief China economist at Barclays Plc in Hong Kong.
Chinese leaders are set to hold their annual Central Economic Work Conference in the coming days to set an economic growth target for 2015. Friday’s language about a prudent monetary policy reiterated the government’s previous stance, suggesting there won’t be major policy shift from that meeting, which the Ta Kung Pao newspaper reported will start on Tuesday.
Chinese leaders will lower the GDP growth target for 2015 to 7 percent, from this year’s 7.5 percent, and the government will continue its monetary policy easing stance, Bank of America Corp. economists Ting Lu and Xiaojia Zhi wrote in a note Friday.
“As the new leadership consolidated power after two years of anti-corruption campaigns, it will increasingly shift focus to economic growth and structural reforms in 2015,” they wrote.
Speaking at Friday’s Politburo meeting, Xi said the government would put a new emphasis on restructuring, according to Xinhua. Bloomberg