Economics

China's Central Bank Faces Policy Bind Over Debt, Growth Goals

  • Slumping yuan, trade war complicate debt cleanup for PBOC
  • New governor Yi has kept policy tweaks targeted so far
Professor Eswar Prasad, former head of the IMF’s China unit, talks about China’s currency policy.(Source: Bloomberg)
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China’s central bank is caught in a bind, as it seeks to tighten monetary policy for some parts of the economy while loosening it for others.

Already engaged in the mammoth task of wringing bad debts out of China’s $40 trillion-plus financial system, the People’s Bank of China is now attempting to achieve that while simultaneously being asked to bolster flagging growth and rescue falling stock markets.