China's Central Bank Sticks To Monetary Policy Stance

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China will continue its "appropriately loose" monetary policy in 2010, the People's Bank of China Governor Zhou Xiaochuan said Thursday.

In his New Year message, posted on the central bank's web site on Thursday, Zhou said 2010 will be a crucial year for Chinese policy makers to stabilize the economy after the international financial crisis. He pledged to continue the current monetary policy stance in 2010, while improving flexibility in accordance with developments in the domestic economy. He thanked all people of the banking system who worked hard during the financial crisis.

In 2009, the financial crisis hit China's export sector hard and the country faces industrial overcapacity. Moreover, a boom in lending and inflows of foreign capital poses the threat of an asset bubble.

Recently, Chinese Premier Wen Jiabao pledged to maintain order in China's property market. He said quickly rising property prices deserve government's 'great attention'. In November, property prices had risen the most since July last year.

Wen also said his government has stabilized economic growth and employment and maintained social stability over the past one year. He said China will continue its pro-active fiscal policy and moderately easy monetary policy in 2010. "To withdraw macro-economic policies too early is likely to ruin the efforts made before and reverse economic development," Wen said.

China's gross domestic product in the third quarter rose 8.9%, up from 7.9% growth recorded in the second quarter and 6.1% expansion seen in the first quarter. However, Wen noted that its too early to declare that the crisis is over and much more work is required as there are some continuing uncertainties. The government is targeting 8% growth for 2010, Li Yizhong, the Minister of Industry and Information said this month. The nation also aims for 11% growth in industrial output this year, Li said.

Zhou said the central bank will encourage lending to new industries and agriculture sector. Moreover, the central bank will promote a balanced international payment system and effectively guard any exposure to financial risks.

China will continue its "appropriately loose" monetary policy in 2010, the People's Bank of China Governor Zhou Xiaochuan said Thursday. (Market News Provided by RTTNews)