Ex-PBOC Governor Zhu: China well placed for growth in 2020

In an interview with Reuters Global Markets Forum late Monday, Min Zhu, Chairman of the National Institute of Financial Research at Tsinghua University and former People’s Bank of China (PBOC) Deputy Governor said that it was “very reasonable” for the world’s second largest economy to grow at 6% annually.

Key Quotes:

“2020 can be a good year. The economy is going to stabilize. The trade deal and technological innovations are all picking up, and will all support investments. 6% growth is very reasonable for China.

At this stage China can maintain its growth level. Chinese monetary policy is to remain neutral as we have to be careful on leverage, which is high. Fiscal initiatives will also remain supportive.

I don’t see a huge need in cutting interest rates. There is room in cutting RRR so monetary policy transmission can move smoothly, and liquidity will move into the real sector. Overall, they (PBOC) will maintain policy.

They are trying to find the best way to make it work for both sides. Phase 1 is very much focused on trade and intellectual property protection. There is room to talk in Phase 2, more broadly on the issues of technology, declining number of Chinese students going to the U.S. and blacklisting of Chinese companies. There is a need to reduce those uncertainties and have clear boundaries.

I don’t know when Phase 2 (could be signed), but the ball’s in the United States’ court. This is also a (U.S.) election year. But we hope talks will start. Talk is always good and better than no talk, even before the elections happen.”