China will continue to pursue a sound monetary policy, which will be more
closely linked to its industry, taxation and foreign exchange policies, a top
central bank official said yesterday.
"In order to maintain stable and
healthy national economic growth, we will continue to stick to a sound monetary
policy," Su Ning, deputy governor of the People's Bank of China, said
"And we will seek more and effective co-ordination with
industry, taxation and foreign exchange policies when drafting our monetary
policies," the deputy central bank governor said, without
The central bank would continue, as it did before, to employ
a host of measures to curb expansive money supply and credit growth.
measures may include open market operations, as well as interest rate and bank
reserve ratio adjustment, Su told the BusinessWeek CEO Forum in
The central bank has so far raised the interest rate twice and
bank reserve ratio deposits that commercial banks are required to make with the
central bank once this year in a bid to cool the sizzling economy.
said that macroeconomic tightening measures had already succeeded in reining in
red-hot economic growth.
The Chinese economy grew 10.9 per cent in the
first half of this year, with this growth slowing to 10.4 per cent in the third
But the economy still faces several challenges if it is to
maintain robust yet healthy growth, Su said, pointing to slumping consumption,
the soaring trade surplus and escalating fixed-assets investment.
overall proportion of consumer spending in the national economy has been on a
downward spiral for some time, which may pose problems for economic development,
Su told the forum.
The proportion, Su said, has slid from 62 per cent in
the 1980s to 52 per cent last year.
Problems related to the international
balance of payments remain serious, with the foreign trade surplus continuing to
soar this year, he said.
And the risk still remains that fixed-assets
investment, which is "still bigger than it should be," may rebound again, as
local governments and enterprises continue to invest more money in projects, the
deputy central bank governor said.
China's fixed-assets investment grew
by a spectacular 29.8 per cent in the first half of this year and increased 27.3
per cent in the first nine months of 2006.
The central bank, Su said,
will put expanding domestic consumption high on its policy agenda.
bank will also work to improve the credit structure, Su said.
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