The MonetaryPolicy Committee of the People’s Bank of China (PBC) held its fourth quarterlymeeting of 2007 in Beijing days ago.
It was noted thatthe Chinese economy in 2007 has displayed a relatively rapid growth momentumwith improved structure, raised efficiency and enhanced people’s livingstandard. However, the trend of relatively rapid economic development to aneconomic overheating has yet not been contained, represented by excessivecredit extension and increased inflationary pressure. Following the guidance ofthe Communist Party of China’s Central Committee and the State Council, the PBCstrengthened financial macro control to preserve balances at aggregate level.The economic and financial performance has broadly remained in sound situation.
The Committeeconducted in-depth analysis of the current situation and challenges facing theimplementation of the appropriately tight monetary policy, assessed relevantrisks in the process of global economic rebalancing and analyzed structural andunderlining factors affecting inflation trend. The Committee concluded that,the macro-economic control has achieved preliminary results and variousadjustment measures would continue to take effect. Efforts should be made tofully implement the scientific development approach by improving and carryingout each macroeconomic policy to prevent shifts from a relatively fast growthto an economic overheating and from structural price rise to full-scaleinflation, so as to realize good and rapid economic development. At the sametime, the urgency of economic restructuring should be fully recognized, thecoordination of the monetary policy with fiscal policy, industrial policy,trade policy and financial regulatory policy should be enhanced and economicrestructuring accelerated to promote a basic equilibrium of the balance ofpayments.
Weighing themonetary policy stance and measures for the coming periods, the Committee heldthe view that a tight monetary policy should be implemented by taking variousmeasures in line with the guidance of the Central Economic Work Conference.Efforts should be made to strengthen liquidity management by taking effectivemeasures, improve guidance on financial institutions, restrain the excessivegrowth of money and credit and further improve credit structure to ensurecredit support to agricultural economy, job creation, students, small&medium-sized enterprises and other vulnerable groups. Besides, attentionshould be given to guide public expectation through the leverage role ofinterest rate. Improvement of the managed floating exchange rate regime shouldbe effected, continuously following the principle of “ making it aself-initiated, controllable and gradual process”. Market supply and demand offoreign exchange should be allowed to play a greater role in the process ofincreasing RMB exchange rate flexibility, with a view to keeping the RMBexchange rate basically stable at an adaptive and equilibrium level. Forcefulactions should be taken to push ahead financial reform and innovation toimprove competitiveness of financial institutions and efficiency of thefinancial market in resource allocation.
Mr. Zhou Xiaochuan,Governor of the PBC and Chairman of the Monetary Policy Committee chaired themeeting. Other Committee members present at the meeting included Mr. Li Yong,Ms. Wu Xiaoling, Mr. Xie Fuzhan, Ms. Hu Xiaolian, Mr. Liu Mingkang, Mr. Shang Fulin,Mr. Wu Dingfu and Mr. Fan Gang. Mr. Zhang Ping, Mr. Zhu Zhixin, Mr. Su Ning andMr. Jiang Chaoliang were on business trip and did not attend the meeting.Presidents of the PBC Nanjing Branch, Wuhan Branch and Chongqing OperationsOffice also joined the meeting.
