WASHINGTON (Reuters) - The Chinese government and central bank should be “very cautious” in implementing any stimulus programs because they tend to be less efficient than natural market forces in boosting growth, a People’s Bank of China official said on Thursday.
Yi Gang, a vice governor of the bank, also told a conference in Washington, ahead of the spring meetings of the International Monetary Fund and World Bank, that Chinese economic growth of “a little bit more, a little bit less” than 7.5 percent was acceptable. Last year, China’s economy expanded by 7.7 percent.
“Any kind of stimulus package should be very cautious in the sense that you should believe that the market driver is the natural and the most efficient way to grow, and a stimulus growth driver is not as efficient as the natural market driver,” Yi said.
“And the government and the central bank should be very cautious.”
Beijing has been at pains to play down market speculation that it might launch a large stimulus package to support a slowing economy, saying instead that it would fine-tune policies to ensure unemployment did not rise.
Chinese Premier Li Keqiang on Thursday ruled out major stimulus even as big falls in imports and exports added to concerns about a slowdown.
Li stressed that job creation was the government’s policy priority, and it did not matter if growth came in a little below the official target of 7.5 percent.
His comments were among the clearest yet on the government’s plans for the economy, which has rattled global investors this year with a surprisingly lackluster performance.
Trade data on Thursday showed exports unexpectedly fell for the second consecutive month in March, the worst showing in more than four years, while imports fell by the most in 13 months.
Speaking in Washington, Yi of the People’s Bank of China (PBOC) said two-way fluctuations in China’s yuan were “normal”. U.S. officials have voiced concern about the yuan’s recent weakening against the dollar.
Last month, the PBOC loosened its grip on the yuan by doubling its daily trading band, adding teeth to a promise it would allow market forces to play a greater role in the economy.
“In the first quarter of this year, we had several things happen,” Yi said. “The U.S. Federal Reserve had the tapering, and (we) have the increase for our trade deficit.”
“So that I would say that the two-way fluctuation of the renminbi would be a normal phenomenon,” Yi said.
Reporting by David Brunnstrom; Editing by Tim Ahmann, Wayne Cole and Mark Bendeich