A SENIOR official at the People’s Bank of China said yesterday he’s sanguine about the economy because some debt risks will recede and the property market has long-term potential.

The fundamentals of the Chinese economy remain stable and promising in the long run despite short-term challenges, said Zhang Qingsong, deputy governor of the People’s Bank of China, at Hong Kong’s second Global Financial Leaders’ Investment Summit while addressing the concerns of some global investors over the Chinese economy.

Global investors have concerns about the Chinese economy including its pace of recovery and with problems related to real estate and local government borrowing, Zhang said.

“You may ask me, are you worried? No, not always, not too much,” he said, pointing to China’s large working-age population and rapid growth in research and development investment as key driving forces for growth.

Looking back upon China’s economic and social development over the past 40-plus years, all the important goals China set for itself have been achieved, despite the highly complex internal and external environment, he said.

Zhang said the economy has faced challenges this year after three years of the pandemic but it remained resilient overall.

China’s local government debt is a structural issue, and the risks to certain regions will recede gradually, Zhang said. While some provinces may face pressure servicing their obligations, most of their borrowing is backed by physical assets, he said, adding that the country aims build a long-term mechanism to solve the problem.

Zhang called the difficulties facing the housing sector “natural selection and market-clearing process” as supply and demand shifted following years of rapid growth in the industry. China needs to manage the market carefully to avoid sharp downturns and unintended consequences, he said.

He added the country still has a lot of room for urbanization while households continue to have strong demand for bigger homes.  (SD-Agencies)