China Central Bank Seen as Open, Pragmatic in Economist Meeting

Bloomberg News
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(Bloomberg) -- The new leadership at China’s central bank signaled an openness to finding workable solutions to economic problems at a recent meeting with experts, according to one attendee.

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During the three-hour seminar in December, People’s Bank of China Deputy Governor Lu Lei indicated the organization was attentive to feedback and pragmatic about policy, said the person, who asked not to be identified discussing a private event.

The open and off-script discussion with Lu, whose appointment was announced late last month, contrasted with similar talks in recent years when attendees were required to submit comments in advance, the person added.

Officials spoke about the troubled real estate sector and recent market rout, but China’s stubborn falling prices didn’t come up, according to the attendee. Talking about deflation publicly has become off-bounds for many Chinese analysts over the past year, as they are encouraged to promote the narrative that the economy is steadily improving.

China’s central bank did not reply to a request for comment about the meeting.

Among China’s government agencies, the PBOC has traditionally had the closest lines of communication with market participants, because its decisions can significantly influence capital flows.

Investors are watching to see how the organization will operate under Governor Pan Gongsheng, who has led the bank since July. Pressure is building on the PBOC to step up support for the economy, as a slump in the property sector weighs on growth and consumer and corporate sentiment slides.

Data released Friday laid bare the problems. China marked its longest deflationary streak since 2009 in December, while exports fell annually last year for the first time since 2016 due to weak global demand. The benchmark CSI 300 Index is trading near a five-year low.

Most analysts surveyed by Bloomberg now project the bank will on Monday lower the rate on its one-year policy loans for the first time since August, as well as inject more cash into the financial system to boost liquidity and meet funding demands.

A senior PBOC official earlier this week hinted the central bank has considered lowering the amount of money banks must keep in reserve, which can boost lending capacity and bolster credit.

Perhaps in an effort to show the market it’s being responsive, the PBOC disclosed the December seminar in an official statement Wednesday, naming eight experts among the attendees. The analysts provided “constructive opinions and suggestions” about how to enhance policy coordination, better guide market expectations and prevent financial risks, according to the release.

The statement marked at least the second time in a month the central bank has publicized closed-door talks with prominent economic figures. That transparency stands in contrast to other parts of the Chinese government, which have become more opaque in the past year.

--With assistance from Yujing Liu, Qizi Sun and Jill Disis.

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