China's central bank is not overly worried about systemic risks from a downturn in the nation's property sector and high local government debt, a senior executive said in Hong Kong on Nov. 7.
"You may ask me, 'Are you worried?' No, not always, not too much," Zhang Qingsong, Deputy Governor of the People's Bank of China, told global finance industry leaders at the Global Financial Leaders' Investment Summit, organized by Hong Kong Monetary Authority. "From a long-term perspective, the fundamentals of Chinese economy remain stable and promising."
Chinese authorities have implemented various measures, including looser eligibility requirements and easier mortgages, in tier one cities in recent months. The National People's Congress last month approved the issuance of 1 trillion yuan in sovereign bonds, a move widely interpreted as an effort to release debt pressures on local governments.
"We have implemented a series of measures to keep the real estate sector from deteriorating too fast and too drastically," Zhang said. The central government is in a position to offer help to debt-ridden local governments, he said, adding that it is pushing for reforms to make borrowings by local governments more market-oriented. Risks from local government debts should be greatly reduced, Zhang said.
China's gross domestic product increased 5.2% year over year in the first three quarters of 2023, putting the economy on track to achieve the goal of around 5.0% growth this year. The world's second-biggest economy has faced challenges that range from a property market downturn to geopolitical tensions after the COVID-19 pandemic. Economic growth momentum is rising, Zhang said.
Over the last 40 years, "all the important goals China set for itself have been achieved, despite highly complex internal and external environment," Zhang said at the event, which is being attended by top global bank chiefs including David Solomon of Goldman Sachs Group Inc., James Patrick Gorman of Morgan Stanley and Thomas Columba "Colm" Kelleher of UBS Group AG.