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Ample liquidity, but can do more to boost real economy

Updated: 2013-06-27 10:03

While the PBOC is holding firm on its stance that there's enough liquidity in the system...experts do say, that not enough credit is flowing to the real economy or the strategic and emerging industries. They add this creates speed bumps to China's structural reform efforts.

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Peng Wensheng, chief economist of CICC, said, "Currently, the credit flows to areas like real estate and financing platforms. As a result, the real economy suffers from low liquidity, and financial risks are mounting. The central bank have issued warnings that financial institutions can not have loose credit growing while easy money coming in at the same time."

Professor Guo Tianyong, CTR for Chinese Banking Studies, Central University of Finance & Economics, said, "Credit flows not reaching the real economy makes it difficult for small and midium-sized firms and emerging industries to get funds. Loose credit also pushes up the cost of capital use, and can create asset bubbles. We need to cut down the usage of capital-intensive industries in order to push forward China's economic restructuring goals."

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