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China to Pursue Sound Monetary Policy
China will continue to pursue the sound monetary policy to support economic growth this year, central bank governor Dai Xianglong said Wednesday, January 17.
The People's Bank of China, the central bank, will closely monitor economic development, especially price changes and timely adjust money supply by using diversified policy instruments to maintain the stability of domestic prices and exchange rates, Dai told a press conference held by the State Council Information Office.
He pledged to keep an appropriate money growth in 2001, with broad money (M2) projected to grow by 13 to 14 percent and narrow money (M1) 15 to 16 percent.
Net cash injection will be kept within 150 billion yuan this year, while aggregated loans by financial institutions are expected to grow by 1.3 trillion yuan.
Dai vowed to further improve the interest rate mechanism so as to strengthen the central bank's role in the financial market, adding that efforts will be made to improve open market operations, standardize interbank market and diversify debt instruments.
The central bank will also implement various monetary and credit policy measures and promote the reform of state-owned enterprises and the strategic structural adjustment of the economy, with consumer credit, mortgage and education loans encouraged to increase steadily, he said.
Forex Reserves Hit 165.6 Bln USD China's foreign exchange reserves hit US$165.6 billion at the end of 2000, an increase of US$10.9 billion from a year earlier, said the governor of the People's Bank of China.
"The RMB exchange rate remained stable," Dai pointed out.
By the end of 2000, China had 178 overseas banking institutions with total assets of US$34.6 billion, including US$18.8 billion of foreign currency loans, accounting for 22.7 percent of all foreign currency loans in China, according to Dai.
Foreign currency deposits of domestic financial institutions increased by US$25.1 billion to US$128.3 billion, while foreign currency lending declined by US$5.6 billion to US$61.1 billion, Dai said.
China Reaches Financial Control TargetsChina's central bank governor said Wednesday that China had successfully realized its macro financial control goals in 2000.
According to Dai, by the end of 2000, the outstanding broad money (M2) was 13.5 trillion yuan, up 12.3 percent from the beginning of the year; the outstanding narrow money (M1) stood at 5.3 trillion yuan, up 16 percent; while the outstanding money in circulation (M0) was 1.47 trillion yuan, up 8.9 percent.
The aggregate loan balance of all financial institutions amounted to 9.9 trillion yuan at end-2000, up 13.4 percent over the previous year. The loan increase in 2000 mainly consisted of mortgage and consumer credit, financing of state infrastructure projects and agriculture loans, said Dai.
Meanwhile, with the supervision and coordination of the PBOC the asset management companies purchased 1.4 trillion yuan of non-performing assets from the wholly state-owned commercial banks and completed the conversion of 400 billion yuan into equity.
The central bank also further expanded open market operations. In 2000, the interbank lending and repo transactions amounted to 2.32 trillion yuan, up 220 percent from the previous year.
Non-Performing Assets Bottoming OutDai said that the non-performing assets of China's State-owned banks have touched the bottom and are expected to improve year by year.
The four State-owned commercial banks have so far stripped off non-performing assets of 1.3 trillion yuan to financial asset management corporations, which helped lower 10 percentage points of the non-performing loans of the four banks.
He said that by the end of last year, 25 percent of the four State-owned banks' due loans had not been recovered, but the dead loans that need to be written off were less than three percent.
From now on the four banks' non-performing loans are expected to decrease by two to three percent each year, he said.
He said that the central bank will reinforce its efforts in credit supervision to prevent new risks. Policy and legal means will be employed to crack down on debt dodging practices and prevent the appropriation of credit capital into securities markets.
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