China in no rush to tighten policy despite quickening recovery: former stats official

BEIJING (Reuters) - China is unlikely to tighten its monetary policy soon, even though an economic recovery could gain steam in coming months, Xu Xianchun, a former vice head of the National Bureau of Statistics, told Reuters.

FILE PHOTO: A man wearing a mask walks past the headquarters of the People's Bank of China, the central bank, in Beijing, China, as the country is hit by an outbreak of the new coronavirus, February 3, 2020. REUTERS/Jason Lee

The world’s second-largest economy could grow around 6% in the fourth quarter from 4.9% in July-September, before peaking at about 10% in the first quarter of 2021, said Xu, who now heads Tsinghua University’s China Data Center.

Nevertheless, Xu said: “Monetary policy is unlikely to be tightened in the short term and it could be kept stable.

“We have not completely walked out of the pandemic, and there are uncertainties. Next year, policy is likely to become stable and targeted.”

A vice central bank governor has said the central bank would consider policy changes as the economy recovers but would not act hastily.

The central bank has rolled out a raft of easing measures since February. But analysts say the central bank has shifted to a steadier stance as the economy rebounds.

Xu said an expected brisk growth reading for January-March of 2021 could be partly explained by a steep contraction a year earlier - when the economy was hammered by the coronavirus.

Xu said he expects annual GDP growth to accelerate to 7-8% in the whole of 2021 from 2.2-2.5% this year.

A recent Reuters poll forecast GDP growth could slow to 2.1% this year, the only major economy to expand - although at its slowest since 1976 - then surge by 8.4% in 2021.

China’s growth could return to normal in 2022 as distortions caused by the COVID-19 diminishes, and the economy could resume a gradual slowdown in growth due to the country’s demographic changes, resources and tech constraints, Xu said.

Reporting by Kevin Yao and Jenny Su