China’s central bank says the government’s stimulus package has kicked in and the nation’s economy is showing signs of recovery.
Quarter-on-quarter data indicated the last three months of 2008 was the bottom of the downward cycle for the world’s third largest economy, Yi Gang, vice governor of the People’s Bank of China said, Dow Jones Newswires reported on Wednesday.
“The economy is going forward as the stimulus package has started working,” Yi was quoted as saying at a financial forum in Beijing.
“The second quarter and the remainder of this year will continue this recovery trend,” he said.
China announced a four-trillion-yuan ($A823.94 billion) stimulus package in November in a bid to boost investment to prop up the economy as its exports were hit hard amid the global financial crisis.
China’s economic growth slowed to 6.1 per cent in the first quarter, which several analysts said was the lowest in nearly two decades, from 6.8 per cent in the fourth quarter of 2008.
But some other data for March showed a noticeable improvement, with the industrial output rising 8.3 per cent in March from a year earlier, compared with 3.8 per cent in the first two months of this year.
Yi said China was facing some deflationary pressures, referring to the decline in March’s consumer price index (CPI), the main gauge of inflation. The CPI will be “very low” but “hopefully” positive this year, he added.
China’s consumer prices fell 1.2 per cent in March from a year earlier, following a 1.6 per cent drop in February. The government is aiming for CPI growth of four per cent for 2009.
Yi called the surge in new bank loans in the first quarter of this year “a positive stgelopment” but added that lending activity ought to be stabilised at a sustainable level, according to Dow Jones.
Chinese banks extended a total of 4.6 trillion yuan in new lending in the first quarter as the stimulus package rolled out, more than 90 per cent of the central government’s minimum target of five trillion yuan for the full year.
Speaking about China’s massive foreign reserves, which stood at $US1.95 trillion ($A2.75 trillion) at the end of March, Yi said they were “already enough” and he hoped they would remain stable.
He also reaffirmed China’s stance that, as a large holder of dollar assets, it is a long-term investor, not a short-term speculator.