BEIJING: Governor of Central Bank of China, Zhou Xiaochuan, said at a news conference during annual meeting of country’s top legislature said that China will not change its careful monetary policy stance, but would consider adopting a more flexible approach toward either a tighter or more easing direction.
“The Chinese economy is facing a ‘new normal’, or a new stage of slower growth than the past few years. But a new normal is still a normal situation, not something special or problematic. So we don’t need a new term to define our monetary policy,” he added.
He noted that the central bank recently used a number of monetary policy tools that the public is unfamiliar with, such as the standing lending facility, but the volume of liquidity released by each tool was not very huge compared with the size of the Chinese economy.
“Although we used various monetary policy tools, the growth of broad M2 money supply is still moderate. It shows that our prudent monetary policy remains unchanged,” he said.
Statistics released by the PBOC on Thursday showed that M2 rose 12.5 percent in February from a year ago, quickening from 10.8 percent in January, which was the weakest since 1998.
Chinese banks extended 1.02 trillion yuan ($162.9 billion) of new loans in February, well above market expectations. For the first two months combined, new lending rose to 2.49trillion yuan, from 1.96 trillion yuan a year earlier.
Zhou said the central bank has tried to inject more capital into the areas of the economy where structural changes are mostly needed and it will take some time to see an increasingly positive effect of such policies. But he also said the public should not overestimate the impact of liquidity management and base money issuance on the adjustment of economic structure.
Qian Yingyi, dean of the School of Economics and Management at Tsinghua University, told China Daily there is no need for the central bank to ease its monetary policy unless new problems arise in the economy.
“People think monetary policy can work magic in stimulating the economy. But the monetary policy should not play this kind of role. What is more important is the overall economic restructuring, for which the monetary policy can provide a stable environment,” said Qian whois also a member of the National Committee of the Chinese People’s Political Consultative Conference.
