MNI POLICY: BOJ Wary Of Slow China Recovery, Fed Hike Impact

Bank of Japan officials are worried about a slower recovery in the Chinese economy, seeing it as very unlikely that China will achieve its 5.5% growth target, MNI understands.

However, they expect President Xi Jinping to use his authority to drive monetary and fiscal policies to boost economic growth, although BOJ officials cannot predict any specific economic growth outcomes.

The BOJ doesn't expect China to abandon its "zero-Covid" policy immediately. Renewed lockdowns would cause supply-side disruptions and dampen demand, which would weigh on the global economy and dampen Japan’s exports and production, the BOJ warned.

Bank officials are also paying attention to the timing and extent of the economic impact of the US Federal Reserve's rate hikes, with the U.S. economy remaining solid except for housing investment.

President Xi Jinping, speaking at the opening ceremony of the 20th National Congress of the Chinese Communist Party in Beijing on Sunday, said China will promote reasonable growth by expanding domestic demand, deepening supply-side structural reforms, increasing total factor productivity, and safeguarding industrial supply chains. (See MNI: China's Xi Pledges Reforms, Eyes Domestic Demand Growth)