 hina
will put maintaining the stability of renminbi as the priority of its monetary policy in
the 10th Five-Year Plan period (2001-2005), officials said. That
will be based on robust economic growth, stable prices and hefty foreign currency
reserves.
The government pledged to take concrete efforts to boost domestic demand and
increase input in infrastructure construction this year to consolidate an economy that has
returned to a high-growth track in 2000 after years in a deflationary swamp.
Still, while expanding domestic demand and keeping deflation in check, the
authorities will also be on guard against inflation or an overheated economy this year,
said Premier Zhu Rongji in his report on the five-year blueprint at the opening of ongoing
Fourth Session of the Ninth National People's Congress (NPC).
He said China will continue to implement a "prudent monetary policy" and
regulate money supply in a timely fashion to keep the renminbi stable.
A stable yuan includes two principles, namely a stable domestic economy and
foreign exchange rate, said Dai Genyou, director of the Monetary Policy Department of the
People's Bank of China, nation's central bank.
Dai said China must keep the growth of the consumer price index - the barometer
for inflation - at less than 3 per cent per year.
That, combined with a stable foreign exchange rate, will benefit the nation.
"It is still necessary to keep the renminbi exchange rate under a
managed float," Dai said.
Currently, the market mechanism in China is still not sound enough to shoulder a
liberalized exchange scheme, he said.
Yuan is now only convertible under the current account. The central bank has not
given a timetable for the convertibility of yuan under the capital account.
Meanwhile, to boost economic growth, the central bank will increase input in
infrastructure facilities and adjust its lending policy to increase housing, exports and
rural loans in the next few years.
It will also improve supervision of financial institutions and protection of
customer rights, said central bank chief Dai Xianglong when joining delegation discussions
of the NPC meeting.
He said the authorities would try to reduce financial risks and increase deposit
security, especially at rural credit units.
And while promoting structural reform in the big State-owned banks and try to
reduce their bad assets, the central bank also will add support to smaller commercial
banks and encourage their public listings.
Dai said shareholding commercial banks play an important role in promoting
financial reforms and economic growth, but he also urged them to improve corporate
structures and curb financial risks.
He said the currency market should develop in pace with the capital market and the
two should co-operate.
More
shareholding banks are expected to be listed on domestic stock markets in the next few
years in addition to the three already-listed banks.
All domestic banks are urged to increase innovation and expand their business
scope to prepare for foreign competition after China's accession into the World Trade
Organization, expected this year.
Source from Business Weekly
|
