PBOC Struggling to Influence Rates

China’s central bank chief is learning you can’t control what you can’t cut.

The People’s Bank of China’s removal of state controls on borrowing costs last year has left Governor Zhou Xiaochuan struggling to influence rates with tools such as adjusting some banks’ reserve requirements and targeted liquidity injections. Those steps haven’t stopped new credit and money-supply growth from slowing.

Economists forecast aggregate financing of 1.135 trillion yuan ($185 billion) for August, according to the median estimate in a Bloomberg survey ahead of data due by Sept. 15. Combined with July’s slump, that would be the weakest two months for China’s broadest measure of new lending since 2011.


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