The People’s Bank of China, the country’s central bank, recently issued the China Monetary Policy report for the third quarter of 2019. The report says China will maintain its stable and prudent monetary policy, strengthen counter-cyclical regulation, make structural adjustment more effective, suitably cope with short-term economic downturn pressures, and not resort to large-scale stimulus.

In the first three quarters of this year, China’s GDP grew 6.2 percent, which means it is still the leading engine of global growth despite the sluggish world economy. But the fact that China’s GDP growth rate has gradually declined from 6.4 percent in the first quarter to 6.0 percent in the third quarter shows the economy faces an ever-increasing downward pressure.

The central bank has refrained from using large-scale stimulus despite the downturn pressure because monetary policy should be in accordance with the needs of macroeconomic operations. Many factors including the impact of slowing global growth and domestic adjustments are responsible for China’s slowing growth rate – and they cannot be addressed simply by resorting to stimulus.

Loose monetary policy won't solve problems

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