China’s economy could see a potential growth rate of under 6% in the next five years, Bloomberg reports Friday, citing a working paper released by the statistics department of the People’s Bank of China (PBOC) on Thursday.
Key findings
“Potential growth was projected at 5%-5.7% in the period covering the government’s latest five-year plan through 2025. That represents an overall “medium to high” growth rate.”
“The objective of monetary policy should be to match actual output with potential, and the support of monetary policy to the real economy should be in line with the expansion of potential GDP.”
“Traditional large-scale fiscal and monetary stimulus policy won’t be able to lift real GDP growth above potential. Such stimulus would only lead to inflation and a rapid increase in the debt ratio, causing systemic risks to the economy.”
Market reaction
USD/CNY reverses losses to trade modestly flat at 6.5419, as of writing.
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