China's central bank committed again to prioritizing price control in its policy considerations. The monetary policy committee of the People's Bank of China held its quarterly meeting for 2011 in Beijing recently, pledging to closely follow the situation and impact of the international and domestic economic and financial development.
The meeting reiterated the central bank's commitments on maintaining prudent monetary policy and improving the specificity, flexibility and effectiveness of the monetary policy. The central bank has vowed to exploit more diversified tools to develop a better structured policy framework to leverage liquidity more effectively by keeping the aggregate social financing scale and money supply at a more reasonable level.
Commercial banks will be encouraged to give more credit support to key areas and weak sectors and at the same time be restrained from favoring industries with high energy and pollution intensity or overcapacity. Direct financing should have a bigger role to play.
The system of forming the yuan exchange rate should be improved to keep the basic stability of the yuan exchange rate at an equilibrium level.
The central bank believes that the monetary policy is working effectively. However, it also warns that the country is still facing a complicated economic and financial reality. With the global economy in slow, fragile recovery, China's economy is keeping a steady and rapid growth with imminent problems yet to be addressed.
