The State Council has recently appointed new members into the Monetary Policy Committee.The Committee is now chaired by Mr. Zhou Xiaochuan, Governor of the People's Bank of China and comprises 12 other members. They are Mr. You Quan, DeputySecretary-General of the State Council, Mr. Zhu Zhixin, Vice Minister of the State Development and Reform Commission, Mr. Jin Liqun, Vice Finance Minister, Madam Wu Xiaoling, Deputy Governor of the People's Bank of China, Mr. Li Ruogu, Deputy Governor of the People's Bank of China, Mr. Li Deshui, Commissioner ofthe National Bureau of Statistics, Mr. Guo Shuqing, Administrator of the State Administration of Foreign Exchange, Mr. Liu Mingkang, Chairman of the China Banking Regulatory Commission, Mr. Shang Fulin, Chairman of the China Securities Regulatory Commission, Mr. Wu Dingfu, Chairman of the China Insurance Regulatory Commission, Mr. Xiao Gang, Chairman of China Association of Banks and President of Bank of China, and Mr. Li Yang, Director of Institute of Financial Research, China Academy of Social Sciences.
The Monetary Policy Committee was originally established in July 1997 upon approval of the State Council.According to the Regulations on Monetary policy Committee of the People's Bank of China issued by the State Council, the Committee's major responsibility was to discuss and advise on important issues related to monetary policy based on macroeconomic targets set by the government. These issues include formulation and adjustment of monetary policy, policy targets setting for a certain period of time, application of policy instruments, major policy measures to be taken and coordination between monetary policy and other macroeconomic policies.
The Committee plays its advisory role through regular meetings of its members. Between July1997 and January 2003, the Monetary Policy Committee altogether held 21 regular meetings in which members had extensive discussions on important policy issues like money supply, interest rate, exchange rate, open market operations,required reserves, rediscount as well as coordination between monetary policy and other macroeconomic policies. After each regular meeting, the Committee issues a press release in which main contents of discussion are disclosed and the future stance of monetary policy is indicated as well. The creation and functioning of the Monetary Policy Committee is called for by development of the socialist market economic system in China, and it is an institutional innovation combining domestic and international experiences to strengthen macroeconomic management in China. Such an arrangement has greatly contributed to fostering formulation and implementation of the monetary policy in a scientific and transparent way.
In accordance with the reshuffle plan of the State Council adopted by the 1st Plenary Session of the 10th National People's Congress, the People's Bank of China will strengthen functions in formulating and implementing monetary policy so that the central bank could play a more significant role inmacroeconomic management. The composition of the new Monetary Policy Committee reflects such a consideration with its membership broadened to include a Deputy Secretary-General in charge of financial affairs in the Sate Council and the Chairman of the newly established China Banking Regulatory Commission. Moreover, the China Association of Banks is selected instead of a wholly State-owned commercial bank as the representative institution of the banking industry in the Monetary Policy Committee, aiming at comprehensively reflecting views of the banking sector in the making and implementation of monetary policy. With such a change in its membership, the Monetary Policy Committee nowis more representative of various economic sectors, which is conducive to improving its advisory role, fostering coordination between monetary policy and other macroeconomic policies and encouraging responses from different sectors on the making of monetary policy.
