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China will maintain a prudent monetary policy, according to a regular quarterly meeting of the Monetary Policy Committee of the People's Bank of China, the central bank. The meeting stated that, to make monetary policy more effective, policies concerning local and foreign currencies should be better coordinated and liquidity management in the banking regime intensified. In its think tank role, the monetary policy committee holds regular quarterly meetings to analyse economic and financial performance and put forward proposals on monetary policy. The first quarter meeting said the central bank had utilized various monetary policy instruments to improve regulation of liquidity, push forward the market-oriented reform of interest rates and increase the flexibility of the Renminbi exchange rate against foreign currencies. It recommended expanding domestic demand, optimizing investment structures and loan mixes and instituting proper controls on fixed-assets investment and credit extensions. More attention should be paid to the quality and efficiency of economic growth and competition among financial institutions should be increased. The meeting considered China's financial operations to be stable at the present time. According to the central bank, at the end of February, the outstanding amount of narrow money, or M1 (cash plus corporate current deposits), stood at 12.6 trillion yuan (US$1.6 trillion), a growth of 21 percent year-on-year, and up 0.8 percentage point on a month earlier. The outstanding amount of broad money, or M2 (M1 plus residential savings deposits), stood at 35.9 trillion yuan (US$4.7 trillion), up 17.8 percent year-on-year, 1.9 percentage points higher than the month-earlier level. Cash in circulation (M0) amounted to 3.1 trillion yuan (US$402.6 billion) at the end of February, up 25.1 percent. Outstanding RMB loans increased by 17.2 percent to 23.5 trillion yuan (US$3.1 trillion), with the growth rate 1.2 percentage points higher, and outstanding RMB deposits rose 16 percent to 34.5 trillion yuan (US$4.5 trillion). According to the National Bureau of Statistics, China's CPI, or consumer price index, was 2.2 percent in January and rose to 2.7 percent in February. The indicator stood at 2.4 percent for the January-February period. (Xinhua News Agency April 3, 2007) |
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