A view of the PBC's headquarters in Beijing Photo: cnsphoto

The economic impact of the coronavirus will be temporary in China as the country's economy has strong resilience and great potential. The fundamentals of China's high-quality development will not change, said People's Bank of China Governor Yi Gang in a statement published on Sunday.

He believes China should keep its leverage ratio as stable as possible so as to achieve a balance between growth and risk prevention, and leave room for the economy to maintain long-term sustainable growth. An overly strong macro stimulus may hike inflation risks and lead to an excessive amount of financial leveraging.

Yi highlighted the need to raise the share of direct and equity financing to combat bank debt and maintain fi¬nanc¬ing for the real econ¬omy while stabilizing the leverage ratio. 

He believes it is necessary to advance the reform of the securities issuance registration system and increase the transparency of the capital market.

For the real estate market Yi advocates risk management and a long-term mechanism to stabilize land prices, housing pricesand expectations, and to strengthen the overall monitoring of financing sources. 

Property policies should be adapted to individual cities' situations and macro-prudential policy in the counter financial cycle should be strengthened, he said.

He added that it is necessary to further straighten out the fiscal and taxation relationships between central and local governments,improve local taxation systems, establish a compliant, regulated, transparent and self-restricted local government debt financing mechanism, and reduce reliance on the transfer of land usage rights to maintain local fiscal expenditure.