The Monetary Policy Committee of the People's Bank ofChina (PBC) held its first quarterly meeting of 2004 in Beijing days ago.

 

It was noted that the Chinese economy has maintainedgood growth momentum since the beginning of the year. The PBC continued toimplement sound monetary policy and closely monitored economic and financialdevelopments while at the same time applying various instruments to strengthenpolicy fine-tuning and open market operations to control liquidity of thefinancial system and the growth of the base money. Broad money (M2) reachedRMB22.7 trillion yuan at the end of February, a year-on-year increase of 19.4%.Outstanding balance of loans extended by all financial institutions increasedby RMB509.2 billion yuan, accelerating by 55.3 billion yuan from a yearearlier. In particular, RMB loans grew by 462.5 billion yuan, 24.6 billion yuanmore than the growth recorded a year earlier. Operation of the financialindustry broadly remained stable.

 

The Committee conducted in-depth analysis of thecurrent economic and price development, agreeing that some of the macroeconomicmanagement measures taken since last year have already produced preliminarypositive results, but certain problems emerged in the process of economicoperation are yet to be resolved. Fixed asset investment continued to expandrapidly, consumer demand remained buoyant and CPI maintained its risingmomentum since the second half of 2003.

 

The Committee called for strengthening ofmacroeconomic and financial management to ensure the rapid and steadydevelopment of the Chinese economy. While consistency and continuity ofmacroeconomic policies should be preserved, appropriate measures should betaken in due course to fine-tune the forcefulness and focus of the policy inline with the changing environment.

 

Weighing monetary policy stance and measures for thecoming periods, the Committee holds the view that the sound monetary policyshould be continued while efforts need to be made to further improve thescientific and forward-looking approach in the making of monetary policy. Moneyand credit growth should be properly controlled, with credit structure to befurther improved and direct financing steadily advanced. While financialsupport to economic growth must be guaranteed, no negligence should be toleratedin preventing inflation and financial risks.

 

The Committee also agreed to keep the RMB interestrates basically stable while pushing ahead the market-based interest ratereform. Balance of international payments will be enhanced and the RMB exchangerate will be maintained basically stable at an adaptive and equilibrium level.

 

Mr. Zhou Xiaochuan, Governor of the PBC and Chairmanof the Monetary Policy Committee chaired the meeting. Other committee memberspresent at the meeting included Mr. You Quan, Mr. Zhu zhixin, Mr. Li Yong, Mr. LiDeshui, Mme, Wu Xiaoling, Mr. Guo Shuqing, Mr. Wu Dingfu, Mr. Liu Mingkang, Mr.Shang Fulin and Mr. Li Yang. Presidents of the PBC Shanghai Branch andOperations Offices in Beijing and Chongqing also attended the meeting.