The central bank said yesterday that it would focus on control of liquidity as one of its major tasks this year and keep the growth of the broad measure of money supply at about 16 percent.

The target for M2 growth is one percentage point less than last year's actual figure, the People's Bank of China (PBOC) said on its website.

But there is a caveat: the gross domestic product (GDP) grows by about 8 percent and the consumer price index rises by about 3 percent, it said.

The central bank issued the statement after it wound up its two-day annual work conference, widely deemed as instrumental in implementing the guidelines hammered out at the national financial work conference which ended on Saturday.

Excess liquidity has mainly been blamed for the country's runaway investment, and the central bank has raised commercial banks' reserve requirements four times and interest rates twice since April 2006.

Zhou Xiaochuan, governor of the central bank, said earlier this month that the PBOC does not rule out taking more measures to dampen liquidity.

The bank said yesterday that it would "continue to follow a prudent monetary policy and resort to multiple monetary policy tools" to achieve sound economic growth.

The central bank said the flexibility of the renminbi exchange rate regime has significantly improved since the path-breaking foreign exchange reform in July 2005.

"The role of the market will be further promoted in the setting of the renminbi exchange rate."

(China Daily 01/22/2007 page1)