China Still Has Policy Space Amid Trade Spat, PBOC Adviser Says

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China still has room to adjust its fiscal, monetary and real-estate policies if uncertainty over trade with the U.S. generates further downward pressure on the economy, central bank adviser Ma Jun said Friday.

“In the short term, there is still a lot of uncertainty about China-U.S. trade tensions. If there is a mini-deal, it would be a boon for China’s economy next year. If not, and the tensions worsen, there will be rising downward pressure,” Ma, a member of the People’s Bank of China’s monetary policy committee, said on the sideline of the New Economy Forum in Beijing. “China still has room to adjust its counter-cyclical policies including fiscal, monetary and for real estate.”

Local governments should have space to tailor property policies to the local situation, as different localities face distinct supply and demand pressures, Ma said.

“While there is no need to change the goal stated by the central government, local government could have some flexibility to conduct counter-cyclical property policies,” he said.

In response to a massive increase in housing prices, China’s leadership has repeatedly said that “houses are for habitation, not for speculation.”

Ma also noted that surging pork prices are a concern as they could drive up inflation expectations, potentially changing the consumption behavior of companies and consumers. However, it’s only a matter of time until the issue is resolved, he said.

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