The Monetary Policy Committee of the PBC held the 2ndQuarterly Meeting of 2003 in Beijing recently. It was the first meeting of theadvisory body after the State Council appointed new members into the Committee.
It was agreed in the meeting that, thanks to strongleadership of the State Council, the Chinese economy had maintained favorablegrowth momentum as great efforts were made both to control the SARS epidemicand promote economic development. The PBC continued to conduct sound monetarypolicy and ensured timely provision of financial services for SARS preventionactivities. In May, balance of broad money (M2) increased by 20.2 percentyear-on-year to RMB20 trillion yuan, and RMB loans of all financialinstitutions grew by RMB1.2561 trillion yuan from end-2002 to RMB14.4 trillionyuan, RMB719 billion yuan more than the expansion recorded for the same periodof 2002. In general, the financial industry performed well in the first fivemonths of this year.
The Committee had in-depth review of the currenteconomic and financial development both at home and abroad and the policymeasures to be taken in the coming months. It was agreed that the principle ofexpanding domestic demand should be persistently observed and the soundmonetary policy continuously implemented to maintain the continuity andstability of monetary policy. Various monetary policy instruments should beflexibly used to strengthen open market operations and ensure steady growth ofmoney supply so as to maintain the good momentum of economic and financialdevelopment.
It was emphasized that underlying financial risks inreal estate development and low-efficient duplicated constructions brought byrapid credit growth should be closely monitored and prevented with credit riskearly-warning and surveillance arrangement to be strengthened. Meanwhile, loanstructure should be further improved to prevent new credit risks and promotereform of the state-owned commercial banks.
It was also agreed that the deposit and loan interestrates and the exchange rate of RMB should be kept stable, and market-basedinterest rate reform should be steadily advanced.
The meeting was chaired by Mr. Zhou Xiaochuan,Governor of the PBC and Chairman of the Monetary Policy Committee, and joinedby other Committee members including Mr. You Quan, Mr. Zhu Zhixin, Mr. JinLiqun, Mme. Wu Xiaoling, Mr. Li Ruogu, Mr. Li Deshui, Mr. Guo Shuqing, Mr. LiuMingkang, Mr. Shang Fulin, Mr. Wu Dingfu, Mr. Xiao Gang, Mr. Li Yang.Presidents of the PBC branches in Shenyang, Tianjin and Nanjing also attendedthe meeting.