The Monetary Policy Committee of the PBC held the 2^ndQuarterly Meeting of 2004 in Beijing on June 18^th.

 

It was agreed in the meeting that the Chinese economyhad maintained rapid growth momentum, and macro-economic management measureshad further produced results since the beginning of this year. The PBCimplemented the CPC Central Committee and State Council's decision andarrangement on enhancing macro-economic management, and adopted variousmonetary and credit measures with the support of relevant government agenciesto reinforce aggregates control. At end-May, balance of broad money (M2)reached RMB23.5 trillion yuan, a year-on-year increase of 17.5 percent, and newloans of all financial institutions registered RMB1258 billion yuan, adeceleration of RMB92.8 billion yuan on year-on-year basis. Overall speaking,the strong growth momentum of money supply and loans had been reined in, andthe macro financial control measures had produced expected result.

 

The Committee made an in-depth review ofcurrent economic and financial developments. It was agreed that the Chineseeconomy in general was in good shape, and macroeconomic management had achievedsignificant results. At present, the PBC should thoroughly, accurately andpositively understand and carry out the central government's decision andarrangement on macro-economic management, stick to market-orientation in policymaking, follow the economic principles, support capital market development, givefull play to the movitation and creativity of economic agents, strengthen thecoordination with industrial policy and fiscal policy, and improve theselection and intensity of proper policy instruments so as to ensure the steadyand relatively fast economic growth.

 

The committee stressed the necessity of designing anoptimum pre-emptive and fine-tuning strategy featuring a combination of monetarypolicy instruments to further improve the scientific, forward-looking and effectiveapproach to macro-economic management. Monetary policy instruments should be adoptedto timely and moderately manage the financial system liquidity while avoiding majorfluctuation. Market-based interest rate reform should be steadily advanced and RMBexchange rate formation mechanism be further improved to keep RMB exchange ratebasically stable at an adaptive and equilibrium level and promote theequilibrium of the balance of payments.

 

The meeting called for promoting structural adjustment,institutional reform and growth pattern while strengthening aggregates control soas to fully adopt the scientific approach to economic development; and speedingup construction of financial markets to improve the efficiency of monetarypolicy transmission.

 

The meeting was chaired by Mr. ZhouXiaochuan, Governor of the PBC and Chairman of the Monetary Policy Committee,and joined by other Committee members including Mr. Zhu Zhixin, Mr. Li Yong,Ms. Wu xiaoling, Mr. Li Ruogu, Mr. Li Deshui, Mr. Guo Shuqing, Mr. LiuMingkang, Mr. Shang Fulin, Mr. Wu Dingfu, and Mr. Li Yang. Presidents of thePBC operations offices in Beijing and Chongqing, and Shanghai branch alsoattended the meeting.