China Relies on Investments But Not on Stimulus, PBOC Governor Says

China has veered away from the previous growth model which is largely dependent on investments but less on stimulus to improve the economy in the future, according to the Bank of China governor, Zhou Xiaochuan, on Friday.

This rhetoric from Zhou reached the higher officials in China for this week denoting that Beijing will be more heedful in expenses for the while giving attention to the reduction of risks since the debt is increasing at a quicker pace.

After years of stimulus to boost the economy, this raises concern on the market as it could slow down growth not only in China but internationally.

Analysts foresee that Beijing will sustain the current system which is well supplied with cash to lessen the risk of a slow down in the economic growth as they proceed with tightening of the financial regulation.

They now focus on the “new normal” economy as they change growth model quantitatively. The increase in capital and investment are anticipated to boost the growth of the economy, Zhou commented on the pressman during the annual parliament session.

Part of his plan is to lessen dependence on the previous growth model while aiming for a higher quality growth prior to his retirement this month.

He deems the importance of adjustments in the regulatory supervision as soon as possible which is helpful to curb risks on the financial system.

Although he said that the changes have already stated in the reduction of risks but there are still risks such as concerns about the transparency of financial holding companies and digital currencies.