Nation takes cautious approach to keep financial risks at bay

BEIJING - While the market debates China's latest round of economic growth, national regulators are focusing on an equally important factor of the economy: financial cycles. In its latest quarterly monetary policy implementation report, the People's Bank of China, the central bank, devoted a special column to this concept, describing it as an "increasingly significant issue" that should be dealt with macroprudential approaches to prevent systemic risks.

"While traditional monetary policy can address instability during economic cycles, it is not effective enough to balance controls on economic cycles and financial ones, which are caused by the expansion and contraction of financial variables," the PBOC said.

The global financial crisis showed that traditional economic indicators, like gross domestic product growth and the inflation rate, were not necessarily linked with financial stability.