Central bank Governor Zhou Xiaochuan highlighted the effects on China of what he termed five years of crisis, adding to officials’ cautions on the economic outlook even after a rebound in exports.
“Overall our macro-economic controls have been successful,” Zhou said at a briefing in Beijing Sunday as part of the Communist Party congress that begins a leadership transition. “But of course the financial crisis didn’t finish, and became a European debt crisis, and therefore we are still continuing to deal with it.”
China’s export growth accelerated in October and the nation’s trade surplus swelled to $32 billion, the highest in almost four years, a customs report showed Saturday. While the improvement adds to signs that the next generation of leaders may be aided by a strengthening economy, Commerce Minister Chen Deming said Saturday that the trade outlook is “grim” and economic planning chief Zhang Ping said the recovery needs stronger foundations.
“Policy makers are probably trying to down play the recent growth rebound primarily because of concerns on external demand risks,” said Helen Qiao, a Hong Kong-based economist for Morgan Stanley. “In view of the deleveraging need in the U.S. and Europe in the next three to five years, it is hard to be over- optimistic.”
Asked about his future in the job, Zhou, 64, said that one retires at a “certain age.” Zhou is China’s longest-serving central bank governor since the 1960s, with close to a decade in the role, and the publication of a collection of his speeches, articles and interviews fueled speculation that he could be set to retire.
Liu Li-Gang, a Hong Kong-based economist with Australia & New Zealand Banking Group Ltd., said today that he expects a replacement to be announced before the end of this year. Zhou’s status may become clearer when the party this week names its central committee. If he’s no longer a member, that could signal a change.
Zhou said changes to the interest-rate system should be at a “moderate” pace and signaled that he saw less risk from so- called shadow banking in China than in developed ecnoomies. Asked about the central bank’s recent use of reverse repurchase agreements, Zhou said that they were short-term and more flexible than alterations to bank reserve requirements.
China’s overseas shipments increased 11.6 percent from a year earlier, the government said. That compared with the 10 percent estimate in a Bloomberg News survey of economists and 9.9 percent in September. Imports rose 2.4 percent, the same pace as the previous month.
“Based on the data, signs of apparent economic stablization and rebound emerged in September and October,” Zhang, head of the National Development and Reform Commission, said Saturday during the congress. “But we still can’t relax and our analysis concludes that the foundations for stabilization are not solid enough.”
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