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China's Economic Rebound Anticipated in 2023

The People's Bank of China (PBOC) released its quarterly policy implementation report, announcing that China's economy is expected to generally rebound in 2023 with a precise and forceful monetary policy.

Chinese Yuans
Chinese Yuans

Focus on Supporting Domestic Demand and Stabilizing Growth and Prices

The PBOC stated it would support domestic demand expansion and stabilize economic growth and prices while avoiding "flood-like" stimulus. The central bank also pledged to improve social expectations and boost confidence, mainly focusing on stabilizing economic growth, employment, and prices.

Challenges Facing the World's Second-Largest Economy

The PBOC acknowledged that the external environment remains "severe and complex," and the basics of domestic economic recovery are "not solid." The report also mentioned that the property sector requires time to transition and that the pressure of balancing local government fiscal revenue and expenditure persists.

The People's Bank of China
The People's Bank of China

Stabilizing and Improving the Economy

According to the report, the PBOC will keep liquidity reasonably ample and maintain effective credit growth. As the problematic property sector has shown a tentative recovery, the PBOC stated that it will satisfy reasonable financing demand but will insist on not using real estate as a short-term means to stimulate the economy. Late on Friday, the PBOC and banking and insurance regulator issued a notice to encourage commercial banks to issue loans to purchase housing by rental housing groups.

Economic Team Reshuffle and 2023 Policies

Markets are anticipating a government reshuffle, especially of the economic team, and the announcement of economic targets and policies for 2023 during the annual parliamentary meeting on March 5. The world's second-largest economy is stabilizing and improving but still faces many challenges, according to Premier Li Keqiang at a cabinet meeting on Wednesday.