China Has 'Relatively Big' Room To Cut RRR: Xinhua
BEIJING (MNI) - China has ample ammunition to ease policy and boost economic growth, including "relatively large" room to cut banks' required deposit reserve ratio, the official Xinhua News Agency said in a commentary on the first half economy published at the weekend.
"The continued slowdown of economic indicators and weak corporate confidence showed that the downside pressure facing our economy is indeed big ... We must take effective measures to stabilize economic growth," Xinhua said in its commentary.
Xinhua recalled that Beijing's massive CNY4 trillion stimulus package enacted back in 2008 quickly restored economic growth and said the government is now more experienced in managing economic growth.
"Our economic fundamentals have not changed ... Our economic growth is still above the targeted range and is stabilizing," said Xinhua.
"There is significant room for policy adjustment," Xinhua said, noting government's current fiscal deficit is less than 2% of GDP and outstanding treasury debt is less than 20% of GDP.
"There is relatively large room to implement an expansionary fiscal policy. The continuous slowdown of CPI is creating more room for monetary policy. There is relatively large room to cut (bank's) deposit reserve ratio, which is a bit high," said Xinhua.
The People's Bank of China cut interests rates twice this year and deposit reserve requirement three times in the current cycle.
Chinese Premier Wen Jiabao has said several times in recent weeks that the government will step up policy fine-tuning in the second half.
The fourth reserve cut is expected to be delivered in coming days.
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