China central bank economist says no need for strong stimulus

[SHANGHAI] China's employment situation is good and progress has been made in structural adjustments, so there is no need for strong stimulus for the economy despite downward pressure, the central bank's top economist said.

"The central bank's recent lowering of rates and reserve requirements was mainly to prevent passive tightening of monetary policy and to maintain a neutral or steady monetary policy," the People's Daily newspaper quoted Ma Jun, chief economist of the People's Bank of China, on Monday as saying.

"Even though economic growth is coming under downward pressure, the present employment situation is good, structural adjustments have made positive progress, and there is no need for strong stimulus," Mr Ma was quoted as saying.

The world's second-largest economy grew at its slowest pace in six years in the first quarter of 2015 and weakness in key sectors suggested the economy was still losing momentum into April, adding to expectations that Beijing will roll out more support measures to prevent a sharper slowdown.

The People's Bank of China cut reserve requirement ratios (RRR) in early February and did so again this month in the biggest single reduction since the depth of the global financial crisis in 2008.

It has also cut interest rates twice since November.

Private economists see more policy rate and RRR cuts in coming months along with other measures if conditions continue to deteriorate. "There are a lot of tools in the central bank's 'toolbox',"the article in the mouthpiece newspaper of the ruling Communist Party quoted Mr Ma as saying. "If the downward pressure is greater than expected, the possibility of macroeconomic policy continuing to be adjusted cannot be ruled out," he said.

China said on Friday that urban employment held up in the first quarter even as economic growth slowed, but the labour ministry warned that authorities cannot be "blindly optimistic"as the pace of job creation is slowing.

REUTERS