The headquarters of the People's Bank of China (Photo: Xinhua)

China's economy continues to grow and does not show signs of deflation. It is expected that the country will not experience deflation in the second half of the year, Liu Guoqiang, vice governor of the People's Bank of China (PBC), the country's central bank, said during a press conference on Friday.
Liu said that amid hyperinflation in other countries, China's consumer prices have remained relatively stable. In the past few months, prices have shown a downward trend, but it doesn't mean deflation.

The Consumer Price Index (CPI), a main gauge of inflation, is anticipated to remain weak in July, but is expected to pick up in August and maintain a growth rate close to 1 percent by the end of this year, with reasonable and moderate monetary conditions and stable resident expectations, according to the vice governor.

In June, CPI stayed flat on a yearly basis, and lower than the 0.2 percent increase in May, data from the National Bureau of Statistics showed. 

Liu said some of the challenges China's economy is facing are normal phenomena in the process of economic recovery after the epidemic. Consumption and economic recovery after a pandemic takes time, and it is generally recognized that it takes about a year to return to normal. 

China just recovered from the pandemic half a year ago, and it has eyed positive improvements in the economic sector as well as resident income and consumption. "We should have patience and confidence in sustained and stable economic growth," Liu noted.

Liu also reviewed financial data for the first half of the year. From January to June, the central bank cut the reserve requirement ratio by 0.25 percentage points, which released long-term liquidity and enhanced the stability and sustainability of the growth of total credit, effectively serving the real economy. 

At the end of June, the broad M2 money supply increased by 11.3 percent year-on-year, and various loans in yuan up 11.3 percent on a yearly basis.

Liu noted that the prudent monetary policy will continue to be precise and strong, and there is still ample policy space to respond to unanticipated challenges and changes.

In the future, the PBC will continue to provide financial support to small and micro enterprises and private firms, said Zou Lan, a central bank official, noting it will promote the use of inclusive loans as a supporting tool for micro and small businesses and guide financial institutions to increase lending to these companies. 

The central bank will also enhance the financial services provided to micro-, small-, and medium-sized enterprises. It will also work toward improving supporting mechanisms such as enterprise-related information-sharing and financing guarantees, with the aim of enhancing the willingness, capacity, and sustainability of financial institutions in serving these firms.

Global Times