China’s economy remains resilient despite external risks, says Xi

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    BEIJING- China’s economy remains resilient and there are ample policy tools at Beijing’s disposal despite rising external risks, President Xi Jinping said.

    The world’s second-largest economy has steadily recovered from a virus-induced slump, but analysts say policymakers face a tough job to maintain stable expansion over the next several years to turn China into a high-income nation.

    “The basic characteristics of China’s economy with sufficient potential, great resilience, strong vitality, large space for manoeuvre and many policy instruments have not changed,” Xinhua news agency quoted Xi as saying.

    China has strong manufacturing capacity, very large domestic markets and huge investment potentials, Xi said.

    Xi reaffirmed a “dual circulation” strategy that would help steer the economy towards greater self-reliance, as US hostility and a global pandemic increase external risks.

    China still enjoyed “strategic opportunities” in its development, although the coronavirus pandemic has exacerbated global challenges as globalization slows and unilateralism and protectionism are rising, Xi was quoted as saying at a meeting on the country’s 14th five-year plan (2021-2025).

    A man wearing a face mask walks in Lujiazui financial district in Pudong, following the coronavirus disease (COVID-19) outbreak in Shanghai. (Reuters Photo)

    “We must seek our development in a more unstable and uncertain world,” he said.

    Xi urged calmness amid rising difficulties and challenges.

    “The great rejuvenation of the Chinese nation can never be achieved easily with the beating of gongs and drums,” he said.

    Meanwhile, China kept its benchmark lending rate for corporate and household loans steady for the fifth straight month at its September fixing, as expected.

    The one-year loan prime rate (LPR) was kept unchanged at 3.85 percent, while the five-year LPR remained at 4.65 percent.

    Most new and outstanding loans are based on the LPR, while the five-year rate influences the pricing of mortgages.

    Thirty-one out of 35 traders and analysts, or nearly 90 percent, in a snap Reuters poll conducted last week saw no change to either the one-year or the five-year LPR.

    The rate decision came after the People’s Bank of China (PBOC) kept the borrowing cost on medium-term lending facility (MLF) loans unchanged for the fifth straight month.

    MLF, one of the PBOC’s main tools in managing longer-term liquidity in the banking system, serves as a guide for the LPR.

    Recent economic data showed that the world’s second-largest economy has steadily recovered from a virus-induced slump, but analysts say policymakers face a tough job sustaining stable expansion over the next few years.

    China’s economy remains resilient and there are ample policy tools at Beijing’s disposal, despite rising external risks, President Xi Jinping said in remarks published on Saturday.

    The LPR is a lending reference rate set monthly by 18 banks. The PBOC revamped the mechanism to price LPR in August 2019, loosely pegging it to the MLF rate.