In 2001, the People's Bank of China (PBOC) will continue to pursue
the sound monetary policy. Stability, continuity and
forward-looking manner will characterize the policy implementation,
according to Dai Xianglong, governor of PBOC.
Dai made these remarks at a press conference sponsored by the State
Council Information Office on January 17.
Premature change of policy stance will be avoided so as to
consolidate the momentum of the economic rebound. The PBOC will
closely monitor economic developments, especially price movements
and timely adjust money supply by using diversified policy
instruments to maintain the stability of domestic price and
exchange rate, he said.
The implementation of the sound monetary policy in 2000 contributed
greatly to the rebound of the economy. Broad money (M2) reached
13.5 trillion yuan at end of 2000, up 12.3 percent from the
previous year or 14 percent if the individual and corporate
deposits placed with banks by the securities firms were included.
Narrow money (M1) reached 5.3 trillion yuan, up 16 percent.
Currency in circulation reached 1.47 trillion yuan, up 8.9
percent.
The liquidity ratio (M1/M2) was 39.5 percent at the end of 2000,
the highest since 1997. The excess reserves of the financial
institutions averaged at 8.3 percent, indicating strong payment
capacity.
The aggregate loan balance of all financial institutions amounted
to 9.9 trillion yuan, up 1.3 trillion yuan or 13.4 percent,
representing an increase of one percentage point over 1999.
The loan increase in 2000 mainly consisted of mortgage and consumer
credit, financing of state infrastructure projects and agriculture
loans. Mortgage loans increased by 195.2 billion yuan. Other
consumer credit increased by 64 billion yuan. Credit to
non-state-owned enterprises accounted for 48 percent of aggregate
credit, up two percentage points.
With the supervision and coordination of PBOC, the asset management
companies purchased 1.4 trillion yuan of non- performing assets
from the wholly state-owned commercial banks and completed the
conversion of 400 billion yuan into equity.
In
reply to a question about Euro in China’s foreign reserves, Dai
said that Euro has been undervalued and it is expected to have a
good price this year.
Though Euro has a dramatic depreciation, China does not suffer any
actual loss because China reserves Euro for settlement with
European countries.
There is no statistics available on whether specific enterprises
have suffered losses from Euro depreciation, and if any, the figure
should be quite moderate, he said.
In
2001, according to Dai, PBOC will implement the various monetary
and credit policy measures and promote the reform of the
state-owned enterprises and the strategic structural adjustment of
the economy.
Appropriate money growth is expected to provide sufficient money
for domestic economic development. The interest rate mechanism will
be further improved so as to strengthen the PBOC’s capacity of
influencing market interest rates. Efforts will also be made to
improve open market operations, standardize interbank debt
securities market and diversify debt instruments, said the PBOC
governor.
Punishment of deliberate credit delinquencies will be enforced with
policy and legal measures and market discipline will be
strengthened by such measures as public disclosure of delinquent
debtors. Measures will be taken to prevent the use of bank loans
for illegal speculation in the stock market. Bank credit
information system will be improved.
The PBOC will exercise stringent supervision on commercial banks
with respect to non-performing loan ratios, rates of return on
capital and capital adequacy, said Dai. He added that the bank will
continue to encourage the small and medium-size commercial banks
and credit cooperatives to expand their business steadily in the
process of the reform.
(CIIC by Xu Zhiquan 01/17/01)