CHINA-ECONOMY/YUAN Analyst says China growth still possible despite recent turmoil

Record ID: 142308

  • Title: CHINA-ECONOMY/YUAN Analyst says China growth still possible despite recent turmoil
  • Date: 27th August 2015
  • Summary: BEIJING, CHINA (AUGUST 27, 2015) (REUTERS) EXTERIOR OF THE PEOPLE'S BANK OF CHINA CHINESE FLAG FLYING DIRECTOR GENERAL OF THE FINANCIAL RESEARCH INSTITUTE OF THE PEOPLE'S BANK OF CHINA, YAO YUDONG, SPEAKING TO JOURNALIST YAO SPEAKING (SOUNDBITE) (Mandarin) DIRECTOR GENERAL OF THE FINANCIAL RESEARCH INSTITUTE OF THE PEOPLE'S BANK OF CHINA, YAO YUDONG, SAYING: "The Chinese economy is growing at a reasonable pace. We think that in the second half of the year achieving an annual economic increase of 7 percent will not be a problem." YAO'S HANDS (SOUNDBITE) (Mandarin) DIRECTOR GENERAL OF THE FINANCIAL RESEARCH INSTITUTE OF THE PEOPLE'S BANK OF CHINA, YAO YUDONG, SAYING: "The exchange rate adjustment of August 11 has nothing to do with the global stock market volatility. The global stock market fluctuations started on August 20, in between there were nine days. If there were nine days, you need to think, the global stock market is very sensitive, take the exchange rate adjustment on August 11, if the global stock market was going to drop (because of this) then it would have dropped on August 11." YAO'S HANDS (SOUNDBITE) (Mandarin) DIRECTOR GENERAL OF THE FINANCIAL RESEARCH INSTITUTE OF THE PEOPLE'S BANK OF CHINA, YAO YUDONG, SAYING: "The entire internal bond market is developing in a very healthy way, the level of bad debts within the banking system is very low, so overall it's really good, so under these circumstances China is even better placed to deal with a situation like this (liquidity shortfall)." SIGN READING (Chinese): "PEOPLE'S BANK"
  • Embargoed: 11th September 2015 13:00
  • Keywords:
  • Location: China
  • Country: China
  • Topics: General
  • Reuters ID: LVAB1HMPF08HR4WV5TS0EKNTPHX
  • Aspect Ratio: 16:9
  • Story Text: China's currency devaluation should not be blamed for triggering a round of global stock market rout and may resume appreciation over time, a top central bank researcher said on Thursday (August 27).
    In an exclusive interview with Reuters, Yao Yudong, head of the central bank's Financial Research Institute, said the Chinese economy was growing steadily and that jitters over a possible U.S. interest rate rise later this year may have fuelled capital flight out of emerging markets.
    He shrugged off concerns about a possible hard landing in the world's second-largest economy, saying growth was still underpinned by more resilient services and consumption:
    "The Chinese economy is growing at a reasonable pace. We think that in the second half of the year achieving an annual economic increase of 7 percent will not be a problem," Yao said.
    He denied the rate adjustment of August 11 had anything to do with global stock market volatility:
    "The global stock market fluctuations started on August 20, in between there were nine days. If there were nine days, you need to think, the global stock market is very sensitive, take the exchange rate adjustment on August 11, if the global stock market was going to drop (because of this) then it would have dropped on August 11," he said.
    China's surprising move to devalue the yuan by nearly 2 percent on August 11 stocked global concerns about a deepening China growth slowdown, coming just days after poor trade data sparked fears it was to prop up the struggling export sector.
    Policy insiders told Reuters that China has been so surprised by the global reaction to its currency devaluation that it is likely to keep the yuan on a tight leash in the short-term to head off a currency war that could spark a broader financial crisis.
    Yao added, China's economy remains on a sound footing even though some emerging market economies face a possible financial crisis in the coming years, stemmed from potential liquidity stresses if the Federal Reserve moves to raise interest rates:
    "The entire internal bond market is developing in a very healthy way, the level of bad debts within the banking system is very low, so overall it's really good, so under these circumstances China is even better placed to deal with a situation like this (liquidity shortfall)," he said.
    A Federal Reserve interest rate hike next month seems less appropriate given the threat posed to the U.S. economy by recent market turmoil, an influential Fed official said on Wednesday in the clearest sign that fears of a Chinese slowdown are influencing U.S. monetary policy.
    China has plenty of policy room to cope with expected liquidity strains caused by a possible Fed rate rise, Yao said, but he did not explain why he still urged delays in the Fed move.
    He also refused to offer any predictions on future moves in the Chinese stock market, which rallied on Thursday (August 27) after plunging earlier in the week.
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