China to Step Up Financial Supervision ����China's central bank announced today that in 1999 it will implement appropriate monetary policies and further step up its supervision over the financial sector. ����Dai Xianglong, governor of the People's Bank of China (PBOC), said at the annual national financial working meeting which opened today that financial reforms will be continued and efforts will be made to maintain balanced international payments, prevent financial risks and further improve financial services. ����Dai said that China's financial sector operated smoothly in 1998. By the end of last year, the amount of deposits in financial institutions was 10.3 trillion yuan, up 16.2 percent from the beginning of the year, while the amount of loans was 9.39 trillion yuan, up 14 percent. ����He said that in 1998 the supply of money increased 15.3 percent, which played a significant role in promoting national economic development. ����He pointed out that the central bank took a critical reform step in 1998 by restructuring its organizational system, with financial macro control smoothly shifted toward indirect control. ����Effective supervision measures adopted in the year helped alleviate the risks of some financial institutions, he said, which played an important role in maintaining social stability and preventing financial risks. ����An important achievement last year was maintaining the stability of the yuan exchange rate and international balance of payments, which reinforced China's status in the international financial community. ����Dai said that this year the PBOC will draw up and implement appropriate monetary policies to coincide with the country's pro-active fiscal policies, so as to encourage more domestic demand. ����He said that major credit support will be given to infrastructure construction, the upgrading of enterprises' technologies and consumption. Equal support will be given to foreign trade companies, small-sized enterprises with good performance and rural township construction. ����Talking about the focus of financial supervision, he said by the end of 2000, a financial risk management warning system and a financial supervision responsibility system will be established in a bid to cut down commercial banks' bad loans, prevent payment risks for medium- and small-sized financial institutions, achieve a marked improvement of the financial order and protect national financial security. ����He said that the central bank will implement a series of effective measures to reinforce its supervision of state-owned commercial banks, including establishment of a board of supervisors, completion of a new loan classification system, and establishment of financial asset management companies. ����He pointed out that maintaining a stable yuan exchange rate and sufficient foreign exchange reserves will be the key for foreign exchange management in 1999, stressing that China has the ability to reach the two goals. ����He said that efforts will also be made to improve the central bank's services, which include financial expertise and technology, clearing of transactions, treasury management, cash supply and financial statistics. ���� HomeNews 1999-01-20 Page1 Full Story in Chinese