On December 26, the Monetary Policy Committee of the People’s Bank of China (PBC) holds the fourth regular quarterly meeting in 2018 (its 83rd meetings) in Beijing.
Participants analyzed the domestic and international economic and financial situation. It is their consensus view that the Chinese economy has maintained a stable growth momentum with strong resilience, the overall supply and demand remains broadly balanced, and the switch to new growth drivers has gathered pace. The RMB exchange rate and market expectations have remained stable, and the economy has become more resilient against external shocks. The prudent and neutral monetary policy has brought about positive outcomes, as the macro leverage ratio has stabilized, the measures adopted to prevent and mitigate financial risks have produced results, and the financial sector has provided stronger support for the real economy. The domestic economy and financial sectors both have made good progress in structural adjustments, yet deep-seated problems and critical contradictions still persist and the international economic and financial situation has become more complex. The Chinese economy faces tougher challenges.
It is agreed at the meeting that the PBC will continue to closely monitor the marginal changes in the economic and financial situation both at home and abroad, strengthen the sense of crisis, amplify counter-cyclical adjustments, and make monetary policies more forward looking, flexible and targeted. The prudent monetary policy shall be more properly managed to keep liquidity at reasonably ample levels, and keep the reasonable growth of money supply, credit and aggregate financing to the real economy. The financial system reform will be deepened, the two-pillar regulatory framework of monetary and macro-prudential policies and the monetary policy transmission mechanism will be improved. Based on the requirements in deepening supply-side structural reform, efforts will be made to improve financing and credit structures, to enable private enterprises to get financial support that matches their contributions to the economic and social development, to enhance the financial sector’s capacity to serve the real economy by comprehensively implementing policies, and to foster a virtuous triangular cycle among keeping monetary policies prudent, enhancing the vitality of micro entities and giving play to the functions of the capital market, so as to nurture the overall virtuous cycle of national economy. Meanwhile, the financial open-up will be further expanded to boost the vitality and resilience of the financial sector.
It was emphasized at the meeting that PBC will, following Xi Jinping’s Thought on Socialism with Chinese Characteristics for a New Era, earnestly implement the principles of the 19th National Congress of the Communist Party of China (CPC) and the Central Economic Work Conference, and adhere to the principle of pursuing progress while ensuring stability in accordance with decisions and arrangements by the CPC Central Committee and the State Council. The PBC will work to maintain stability in job creation, preserve financial stability, support stable growth of foreign trade and foreign direct investment, and stabilize investment and expectations. The PBC will innovate and improve marco adjustments and use a combination of monetary policy instruments to keep the RMB exchange rate generally stable at an adaptive and equilibrium level, strike a balance among interest rates, exchange rates and the country’s balance of payments, facilitate the stable and sound development of economy, stabilize market expectations, prevent and defuse financial risks, and hold the bottom line of preventing systemic financial risks.
Yi Gang, Governor of PBC and Chairman of the Monetary Policy Committee, chaired the meeting. Ding Xuedong, Lian Weiliang, Liu Wei (Ministry of Finance), Chen Yulu, Liu Guoqiang, Ning Jizhe, Guo Shuqing, Liu Shiyu, Pan Gongsheng, Tian Guoli, Liu Shijin, Liu Wei (Renmin University of China) and Ma Jun attended the meeting as committee members. Representatives from PBC Shanghai Head Office, the Tianjin Branch and the Xi’an Branch attended the meeting as observers.
