Economic Policy News
- Govt. to continue stable monetary policy
Date: 27-Dec-2006 Sources: (Shenzhen Daily)
THE central bank said Monday that it will continue to take steps to keep investment and credit growth in check, while pressing ahead with efforts to make the value of its currency more market-driven.
In a brief statement on its Web site summing up the proceedings of a meeting of its monetary policy committee, the People's Bank of China said that while the economy was generally functioning well, it still encountered some challenges.
'The economic situation is good overall, but it still faces problems such as an structural imbalances, an overly resource-intensive growth model and imbalanced international payments,'the central bank said.
It said that it will continue to implement a stable monetary policy, while trying to improve its control over liquidity in the banking system. It did not elaborate.
The central bank reiterated its long-standing vow to allow market forces to play a greater role in determining the value of the yuan, while keeping the currency 'basically stable at a reasonable, balanced level.'
Since it revalued the yuan by 2.1 percent and decoupled it from a dollar peg in July 2005, the government has frequently said that it is committed to letting the yuan become more flexible over time, but that it must do so at its own pace, despite U.S. pressure to allow it to appreciate more quickly.
The central bank also said that it will actively promote domestic consumption, while working to keep prices stable. It did not mention any details of such plans.
Many economists and officials have said that the economy relies too much on fickle investment and exports, and not enough on household consumption, exposing it to greater risks of a downturn and contributing to trade friction.
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