China's central bank said it'll maintain a steady flow of credit for farmers and businesses that were affected by the country's May 12 earthquake, while keeping the currency's exchange rate stable.

Curbing inflation will take a "prominent position" among the government's priorities, the People's Bank of China said in a statement yesterday after its second-quarter monetary policy meeting. Steady growth and the prevention of rapid price increases will be the main goals of economic policies, the central bank said.

Central bank Governor Zhou Xiaochuan, who chaired the monetary policy committee's meeting, has to keep the economy growing whilst keeping a lid on wages, prices and food costs that threaten to cause inflation. China's highest decision-making body last week issued a statement that omitted the mention of "tight" monetary policy, a sign the government is under pressure to prevent inflation-curbing goals from crimping growth.

"The new policy goals have shifted," Frank Gong and Qian Wang, economists at JPMorgan Chase & Co, wrote in a research note yesterday. "The authorities are increasingly concerned about the potential slowdown of the Chinese economy given the further downshift in global demand and financial market turmoil, the increasing challenges faced by small and medium-sized enterprises and the rising living costs for the low-income group."

Zhou declined to comment when asked yesterday by reporters at a meeting of Asia-Pacific central bankers in Xi'an, Shaaxi Province.

China's economy grew 10.1 percent in the second quarter, the slowest pace since 2005.

(Shanghai Daily July 28, 2008)