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China boosts efforts to rebalance economy

Updated: 2013-07-08 10:44

China's State Council pledged on Friday to maintain a reasonable supply of money and credit to support the country's economic restructuring. These guidelines were made after Chinese Premier Li Keqiang's repeated calls for the country's banking sector to "revitalize its stock of capital and make good use of incremental capital." -- What does this all mean? And what do these guidelines entail?

Tapping idle capital and making good use of incremental capital...That's the core of the ten suggestions put forward by China's State Council to boost the country's economic development.

The State Council said in a seven-paged document issued Friday that it's to maintain China's prudent monetary policy and stable credit growth in order to prop up the country's economic restructuring and transformation.

China's banking regulator also says future credit in the country will mainly be used to support its key strategic industries, small and medium sized enterprises, agro-related businesses, people's livelihood projects and infrastructure.

The pledges are made after a liquidity squeeze last month that sent China's interbank borrowing rates to their highest on record. China's central bank officials have reiterated that China's liquidity structure is healthy.

Meanwhile, China will also encourage its banks to offer more loans and innovative services to support agricultural modernization.

The press conference laid out broad plans to harness China's financial sector to help bring about an orderly closure of factories in industries facing overcapacity. The government also said it would look for ways to channel the country's massive foreign exchange reserves to support the expansion of Chinese enterprises overseas.

Finally, a pledge to gradually liberalise interest rates was also on the agenda...with policymakers adding that they will not back off from its long-term push for reforms to appease a short-term slowdown in China's economic growth.

China boosts efforts to rebalance economy