In this March 9, 2018 photo, Pan Gongsheng, then vice-governor of the People's Bank of China, answers a question at a press conference during the First Session of the 13th National People's Congress (NPC) in Beijing, China. (PHOTO / VCG)

China will implement counter-cyclical adjustments and keep interest rates at a level in line with the requirements of achieving the potential economic growth rate, said Pan Gongsheng, governor of the People's Bank of China, the country's central bank.

Pan said on Wednesday that the PBOC will maintain the country's interest rates at a reasonable level so that financing costs of the real economy can decrease while maintaining overall stable.

Pan also said that the PBOC will provide emergency liquidity support for local governments facing relatively heavy debt burden when necessary

Citing that the country is well on track to accomplish this year's GDP growth target of around 5 percent, Pan stressed the importance of striking the right balance between the rate of economic growth and the quality and sustainability of growth.

The Chinese economy needs to maintain a reasonable growth rate, but achieving high-quality, sustainable development is even more important, Pan said. 

Pan, who is also the administrator of the State Administration of Foreign Exchange, made the remarks at the opening ceremony of the Annnual Conference of Financial Street Forum 2023. 

He also said that the PBOC will provide emergency liquidity support for local governments facing relatively heavy debt burden when necessary, adding that, overall, China's size of government debt is on the lower-middle end globally.

Pan said that financial regulators, in collaboration with relevant authorities, have taken various measures this year to proactively assist local governments in resolving debt risks.

Steps have been taken to promote the transition of local government financing vehicles (LGFVs) into financially independent, sustainable enterprises that do not rely on government credit.

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Other measures include encouraging local governments and LGFVs to use proceeds related to their assets to repay debts; limiting indebted local governments from initiating new investment projects; and facilitating financial institutions engaging in debt resolution through maturity extension, refinancing and debt swaps.