THE People s Bank of China set a money-supply growth target of about 16 percent in 2011, to help slow credit growth as it sees growing risks from inflation.
Inflation pressure is quite strong, the central bank said in its fourth-quarter monetary policy report on its Web site, citing rising capital inflows, labor costs and resource prices.
The government is trying to combat rising prices after the economy expanded a more-than-expected 9.8 percent in the fourth quarter, and 2010 lending breached a government target. The central bank has raised interest rates twice since October and pushed up bank reserve requirement ratios to the highest in more than two decades.
China would face a relatively stable external environment this year, and the domestic economy was likely to maintain fast growth due to investment momentum and consumer spending, the report said. The central bank also reiterated it would increase the flexibility of the yuan.
Policymakers would use tools such as interest rates, reserve ratios and open market operations to manage the economy and adjust inflation expectations, the report said.
Prudent monetary policy is necessary now, because both internally and externally liquidity is adequate, the report said. The bank would also push ahead with interest-rate liberalization.
China s lending totaled 7.95 trillion yuan (US$1.2 trillion) last year, more than the 7.5 trillion yuan target.
The central bank would also step up monitoring of the overall financing size of the society, which includes bonds and stocks apart from loans for policies.
China s growth of M2, the broadest measure of money supply, expanded 19.7 percent last year and compared with targeted growth of 17 percent for the year. (SD-Agencies)
