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China to Continue Sound Monetary Policy
China's pro-active fiscal policies and sound monetary policies have contributed to the overall recovery of economy, said Dai Xianglong, Governor of the People's Bank of China Wednesday.
Future policies will help consolidate and develop the current favorable economic situation, he added at a press conference.
Since the beginning of this year, the People's Bank of China has strengthened the role of monetary policy in facilitating economic growth.
The PBOC increased its loans by 150 billion yuan (US$18.07 billion) during the first six months this year.
The acceleration of the financial reform, improvement in the credit structure, strengthening of financial supervision and reduction in non-performing loans have all contributed to the positive financial performance and conspicuously promoted the national economic growth, the governor said.
Dai noted that at the end of June, broad money (M2) amounted to 12.7 trillion yuan (US$1.53 trillion), up 13.7 percent, while demand deposits and currency in circulation (M1) to 4.8 trillion yuan (US$578 billion), up 23.7 per cent.
The aggregate local currency loans by China's financial institutions increased by 13.8 percent, or 620.4 billion yuan (US$74.75 billion), during the first half of this year.
China's foreign exchange reserves has reached US$158.6 billion by the end of June, up US$3.9 billion over the same period of last year.
Statistics show that the total assets of foreign banks in China has reached US$32.3 billion by the end of June, including US$20.8 billion of loans.
The number of foreign banks allowed to conduct RMB business in Shanghai and Shenzhen has reached 32.
The balance of household savings deposits totaled 6284.2 billion yuan (US$757.13 billion) at the end of June, up 348.7 billion yuan (US$42.01 billion) from the beginning of this year.
The governor admitted that the constraints to monetary policy transmission have not been eliminated and the banking sector is still constrained by risks of non-performing loans.
He predicted that the M1 and M2 growth for the whole year at 14 percent and 20 percent respectively.
Dai also noted that the PBOC actively supports and encourages the country's commercial banks to be listed in the stock market.
The effort will not only help increase capital, but will also reinforce social supervision over the commercial banks, said Dai.
The governor noted that all qualified state-owned commercial banks may also undertake the share-holding system restructuring, or try to be listed in the stock markets both at home and abroad.
Refusing to give a timetable for the liberalization of capital account management, Dai said that China will create conditions to gradually loosen the restrictions. China has made Renminbi convertible under the current account as of December 1996.
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