Wen says prudent policy to continue
Source: Xinhua |
April 14, 2011, Thursday
|
Print Edition
Print Edition
The State Council, China's Cabinet, yesterday pledged to continue the country's prudent monetary policy to rein in soaring prices while maintaining macro-control over the runaway property market.
To keep the economy on track this year, the country needs to properly coordinate the relationship between its monetary supply and structural overhaul, and check inflation, Premier Wen Jiabao said at an executive meeting of the Cabinet.
Wen stressed the importance of keeping prices stable and pledged to further efforts to rein in runaway home prices.
He said the economic environment at home and abroad remains extremely complicated, with many unstable and uncertain factors, such as high unemployment rates in major economies, soaring fiscal deficits and the lingering sovereign debt crisis.
"The exchange rates of major international currencies fluctuated wildly, and prices of food, oil and other commodities kept increasing in global markets, spreading inflationary pressure from emerging markets to developed economies," Wen said.
He said the world economy has thus far failed to return to a pattern of normal growth, with new changes emerging, including unrest in north Africa and the Middle East as well as the massive earthquake, tsunami and nuclear crisis in Japan.
He said the Chinese economy still faces major problems, with huge pressure on the implementation of the ongoing macro-control policies. Prices continue to surge rapidly, the public's inflationary expectations have strengthened, and housing prices keep rising in most cities despite a shrinking sales volume.
"We must keep our minds clear and make good preparations for possible difficulties and risks," Wen said.
He stressed the importance of continuing the country's prudent monetary policy, saying it is "a direction that must be adhered to" for the current macro-control efforts.
The People's Bank of China, the central bank, has raised benchmark interest rates twice and hiked banks' reserve requirement ratios three times this year to tighten lending amid price increases nationwide.
Wen said China's banking system's liquidity is still "quite ample" compared with "normal levels and reasonable demands," as suggested by the "low level" of interbank interest rates in the country.
The huge foreign exchange surpluses held by Chinese banks also expand China's monetary base, he noted. According to China's capital control requirements, the central bank could sell the yuan for foreign exchange assets from commercial banks as part of its foreign reserves to keep the yuan's exchange rate basically stable, thus releasing liquidity into the country's banking system.
Wen said keeping the price levels basically stable was the primary and most urgent task for the government's macro-control this year.
The Consumer Price Index, a main gauge of inflation, rose 4.9 percent in January and February. Economists forecast the CPI figure to rise above 5 percent in March.
To keep the economy on track this year, the country needs to properly coordinate the relationship between its monetary supply and structural overhaul, and check inflation, Premier Wen Jiabao said at an executive meeting of the Cabinet.
Wen stressed the importance of keeping prices stable and pledged to further efforts to rein in runaway home prices.
He said the economic environment at home and abroad remains extremely complicated, with many unstable and uncertain factors, such as high unemployment rates in major economies, soaring fiscal deficits and the lingering sovereign debt crisis.
"The exchange rates of major international currencies fluctuated wildly, and prices of food, oil and other commodities kept increasing in global markets, spreading inflationary pressure from emerging markets to developed economies," Wen said.
He said the world economy has thus far failed to return to a pattern of normal growth, with new changes emerging, including unrest in north Africa and the Middle East as well as the massive earthquake, tsunami and nuclear crisis in Japan.
He said the Chinese economy still faces major problems, with huge pressure on the implementation of the ongoing macro-control policies. Prices continue to surge rapidly, the public's inflationary expectations have strengthened, and housing prices keep rising in most cities despite a shrinking sales volume.
"We must keep our minds clear and make good preparations for possible difficulties and risks," Wen said.
He stressed the importance of continuing the country's prudent monetary policy, saying it is "a direction that must be adhered to" for the current macro-control efforts.
The People's Bank of China, the central bank, has raised benchmark interest rates twice and hiked banks' reserve requirement ratios three times this year to tighten lending amid price increases nationwide.
Wen said China's banking system's liquidity is still "quite ample" compared with "normal levels and reasonable demands," as suggested by the "low level" of interbank interest rates in the country.
The huge foreign exchange surpluses held by Chinese banks also expand China's monetary base, he noted. According to China's capital control requirements, the central bank could sell the yuan for foreign exchange assets from commercial banks as part of its foreign reserves to keep the yuan's exchange rate basically stable, thus releasing liquidity into the country's banking system.
Wen said keeping the price levels basically stable was the primary and most urgent task for the government's macro-control this year.
The Consumer Price Index, a main gauge of inflation, rose 4.9 percent in January and February. Economists forecast the CPI figure to rise above 5 percent in March.
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