China to Maintain Stable Monetary Policy

• China to Maintain Stable Monetary Policy

Following Moody’s decision to cut China’s credit rating last month, the world’s second-largest economy, China, has said it will maintain a stable monetary policy that is neither too loose nor too tight.

According to Chen Yulu, the deputy governor of the People’s Bank of China (PBOC), economic reform would play a pivotal role in the government’s policy toolkit going forward. Especially with credit at 260 percent of the GDP.

Chen’s comment further buttressed statements made by the PBOC and its advisers in recent months when the apex bank said it would maintain a prudent and neutral monetary policy to keep liquidity stable.

Also, Sheng Songcheng, a PBOC adviser was quoted saying the PBOC would not excessively adjust monetary policy but will modulate policy to accommodate present economic position.

While Chen said the central bank would continue to manage aggregate demand as part of the country’s ongoing supply-side reform, it is uncertain how the apex bank will curb excessive credit and still attain 6.5 percent economic growth target.

However, Chen warned businesses about stepping blindly into financial activities and sticking to their core businesses.