(Yicai Global) April 16 -- A prudent monetary policy should be neither too loose nor too tight, and growth rates of M2 broad money and aggregate financing to the real economy should match that of nominal gross domestic product, according to the People's Bank of China monetary policy committee.
This will help to steadily push forward reforms in key areas such as interest rates, and further dredge the transmission channels of monetary policy, the central bank said in a statement following a regular quarterly meeting on April 12.
China's aggregate financing to the real economy rose 10.7 percent annually to CNY208.4 trillion (USD31.1 trillion) in the first quarter while that of M2 increased 8.6 percent.
The PBOC monetary policy committee believes that the yuan exchange rate is generally stable and expectations on the financial market have improved. Its ability to cope with external shocks has also been boosted. The prudent monetary policy reflects requirements of a counter-cyclical adjustment, the macro leverage ratio tends to be stable, financial risk prevention and controls have become more effective, and the quality of finance that serves the real economy has gradually improved.
The structural adjustments in China's economic and financial sectors have undergone positive changes, though some deep-seated problems and prominent contradictions still exist. The international economic and financial situation is complicated and uncertain, the committee added.
The PBOC will pay close attention to marginal changes in international and domestic economic and financial situations, adhere to counter-cyclical adjustment, further strengthen the coordination between monetary, fiscal and other policies, target preemptive adjustments and fine-tuning in a timely manner, as well as focus on preventing risks based on a steady growth.
The central lender also aims to adapt financial support for private enterprises so it corresponds to private enterprises' contribution to economic and social development while also further expanding the high-level and two-way financial opening-up.
It will also strengthen the management as well as risk prevention and control mechanisms of the economy and finance sector while participating in international financial governance.
Editor: William Clegg