Home>>Business
Last updated at: (Beijing Time) Thursday, February 28, 2002

PBC Published Analytic Report on Steady Monetary Policy

The People's Bank of China (PBC) Tuesday published an analytic report in its website in which it elaborated on the origin, connotation and effect of China's steady monetary policies.
PBC said the report aims to "enhance the transparency of China's monetary policies and improve the understanding of different social circles in the policies."


PRINT DISCUSSION CHINESE SEND TO FRIEND


Monetary Polices in 2002

Money supply will be appropriately increased and the guiding role of credit policies is to be strengthened. PBC said it will supervise and urge the commercial banks to improve their services, develop credit sales, straighten out the transmitting system of monetary policies and intensify the momentum in supporting economic development by financial sectors in 2002.

  • Modulating Targets of Monetary Credit


    • The expected modulating targets of monetary credit of PBC in 2002 are: supply amount of M2 and M1 to be increased by about 13 percent respectively, investment of M0 not to exceed 150 billion yuan and credit amount of all financial institutions to be increased by about 1300 billion yuan.

  • Tasks of PBC in 2002


    • "To ensure a proper growth of money supply, give a full play to the guiding function of credit policies so as to direct credit flow and promote the adjustment of economic structure, further reform state-owned commercial banks, enhance the concept of credit sales and straighten out the transmitting system of monetary policies, strengthen investigations and study, and exchange and transmit related information of the implementation of currency credit in time" are to form the stable monetary policies, PBC said.

    Four Reasons of "Steady" Monetary Polices

    China's economic growth has slackened after the Asian financial crisis in 1997. Both investment and consumption witnessed slow growth. Exports reported a sharp shrink. Effective demand in the market is insufficient and prices of commodities got a negative hike. A tendency of deflation has shown up. However, in chorus with its "active" financial polices, China put forward "steady" monetary polices. PBC gave four reasons in its report:

  • The amount of money supply storage is on the up side;


  • The asset-liability ratio of enterprises, especially those state run is exorbitant, effective demand of credit is insufficient;


  • The key problem of economic development lies in economic structural unbalance instead of insufficiency of money supply;


  • Active financial policies include vigorous support to monetary polices.


    • Steady Monetary Polices, a Correct Macroscopic Decision

    A favorable trend in China's economy with high growth and low inflation has proved that steady monetary policy is in keeping with the current situation of the country, the report said, therefore "is a correct macroscopic decision".

    After implementing steady monetary policies, a basic accommodation of money supply, credit growth and economic growth has been guaranteed, positive changes have taken place in credit structure which promoted adjustment in economic structure; financial supervision has been strengthened and quality of credit has been improved; international payment reported a favorable situation; exchange rate of RMB maintained steady; policies of domestic and foreign currency witnessed a harmony and balance of both internal and external economy have been preserved.

    Analysis on Other Problems

    In addition to the elaboration on steady monetary polices, the over 10,000-word analytic report also gives a detailed analysis on some major problems in financial operation such as the balance of deposits and loans of financial institutions, credit for medium and small enterprises and financial services in rural areas.



    China to Stick to Steady Monetary Policies
    China's central bank announced on January 20 that it will continue adopting steady monetary policies while maintaining the exchange rate of the renminbi (RMB), the Chinese currency.

    Major Functions of PBC
  • Monetary Policy


    • To formulate and implement monetary policies is an important function of the PBC. The aim of monetary policies is to maintain the stability of the value of currency and thereby promote economic growth. The PBC shall, under the leadership of the State Council, independently implement monetary policy.

  • Financial Supervision


    • Financial supervision is an important function of the PBC. The PBC performs the following functions: To Approve, supervise and administer financial institutions and financial market, to promulgate ordinances and rules concerning financial administration and business, to maintain the legitimate stable and sound operation of the financial industry.

    Click Here for the Chinese Version of the Report.

    Click Here for More about China's Fiscal Policy


    By PD Online staff member Du Minghua

    Questions?Comments? Click here
    		    Advanced

    Stabilization of Interest Rate to Be Maintained: PBOC Committee

    China to Stick to Steady Monetary Policies

    Fiscal Policy to Remain Proactive: Experts





    >> Full Coverage

     

    Copyright by People's Daily Online, all rights reserved