The Monetary Policy Committee of the People's Bank of China (PBC) held its second quarterly meeting of 2009 in Beijing days ago.
After analyzing the economic and financial situation, the Committee held that it was a critical time for the stability and recovery of the Chinese economy. With the help of the policy measure package to stimulate domestic demand and promote economic growth, China s economy saw positive changes. With improved conditions and positive factors on the increase, the economic performance stabilized and took a turn for the better.
However, the foundation for economic recovery was not solid, especially given the grave external environment due to the uncertain prospect of international economy and declining external demand. The PBC, in line with the overall arrangement of the State Council, implemented a relatively loose monetary policy and strengthened financial support for economic growth.
Liquidity was adequate in the banking system, growth of money and credit supply rapid and the financial system operated in a stable manner.
The Committee held that, the package to cope with the international financial crisis would be implemented in a comprehensive manner, enriched and improved according to changes of the situation. In line with the scientific approach to development, efforts would be made to enable domestic demand to play a greater role in driving economic growth, shift the development model and accelerate strategic restructuring.
Coordination and cooperation between monetary policy and other policies including fiscal, industrial, trade and financial regulatory policies shall be improved, and the forward-looking nature of the monetary policies be enhanced to maintain stable and relatively rapid economic development.
The Committee deliberated on the stance and measures of monetary policy in the next stage. The Committee held that, to implement the decisions and arrangements made by the CPC Central Committee and the State Council on macroeconomic management, the PBC would implement a relatively loose monetary policy, maintain policy consistency and stability, and guide money and credit supply to grow in an appropriate manner.
Towards this end, measures would be taken to further improve the effectiveness of the transmission mechanism of monetary policy, optimize credit structure, bolster the financial support for weak links such as agriculture, farmers and the rural areas and small- and medium-sized enterprises, develop consumer credit, support independent innovation, merger and acquisition, industrial relocation and coordinated regional development.
Efforts would be made to tighten up lending extended to the enterprises in highly energy-consuming, heavily polluting and overcapacity industries. The PBC would further advance financial reform and innovation, and reinforce risk management, in order to enhance the financial enterprises capability in fending off risks.
The meeting was chaired by Mr. Zhou Xiaochuan, Governor of the PBC and Chairman of the Monetary Policy Committee, and attended by Committee members Mr. Li Yong, Mr. Su Ning, Mr. Yi Gang, Ms. Hu Xiaolian, Mr. Liu Mingkang, Mr. Shang Fulin, Mr. Wu Dingfu, Mr. Jiang Chaoliang and Mr. Fan Gang. Messrs. You Quan, Zhu Zhixin, and Ma Jiantang were absent from the meeting on business leaves. Presidents of the PBC Tianjin Branch, Shenyang Branch and Chengdu Branch attended the meeting as non-members.
