PBOC Adviser: Chinese economy could see a risk of ‘quasi-stagflation’
Liu Shijin, an advisor to the People’s Bank of China (PBOC) warned on Monday, the Chinese economy could enter a period of ‘quasi-stagflation’.
Key quotes
“China’s economy could enter a period of “quasi-stagflation" with relatively slow growth and excessively high producer-price inflation.”
“Such a scenario is “very likely" if demand remains weak, producer prices stay high, corporate profits are squeezed, and existing risks in the economy are “released too quickly.”
“The possibility needs close attention - if it happens it will last into 2022.”
Meanwhile, Reuters reports that “a between-the-lines reading of the PBOC's latest quarterly monetary policy report suggests China's central bank is ostensibly leaning toward easing.”
Market reaction
USD/CNY is trading modestly flat at 6.3831, as investors digest the latest PBOC no-rate change decision and the latest weaker yuan midpoint.
Author
Dhwani Mehta
FXStreet
Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.
