More policy easing moves likely in 2020

By Zheng Chaoyu Source:Global Times Published: 2020/1/1 22:10:59

A view of the PBC building in Beijing Photo: VCG

China's room to maneuver its monetary policy has further expanded and more easing measures can be expected in 2020.

China in 2019 maintained a prudent and regular monetary policy to stimulate its slowing economy, with plenty of room for maneuver. Compared to other major developed countries' approaches of quantitative easing, China's neutral monetary policy was relatively restrained. 

However, China's room for loose monetary policy is expanding as major restricting factors are greatly reduced. First, the rising price of pork has started to fall as production recovers. Second, the yuan's downtrend has been reversed since China and the US made interim progress in their trade talks. Third, China has made progress in mitigating financial risks.

The PBC is expected in 2020 to inject more liquidity into the market through various policy tools within the normal space. More countercyclical measures are expected.

China is in no rush to follow other countries that have significantly loosened their monetary policies. If China takes measures in accordance with current international monetary environment standards, there will be plenty of room for several RRR cuts. The country will roll out each policy tool as specific conditions and goals require.

The author is a professor of macroeconomic analysis, monetary policy with School of Economics, Renmin University of China. [email protected]


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