China to keep yuan stable, pay close attention to economic slowdown: PBoC

SHANGHAI (AFX-ASIA) - China will maintain a stable yuan, while at the same time paying close attention to the impact of the slowdown in the world economy, Dai Gengyou, secretary-general of the People's Bank of China's monetary policy committee, was quoted as saying by the Economic Daily.

	    Dai said the monetary policy committee confirmed this as its policy on the yuan at its recent meeting.

	    When asked if the country needs to adjust its monetary policy, including interest rates and credit scale, to take account of changes in the international economic environment, he said the central bank will pay particular attention to maintaining stability in monetary policy.

	    He said the PBoC maintained stable growth in M2 during the first quarter, with the growth rate remaining between 13-14 pct, the target set by central government at the beginning of the year.

	    The domestic economy maintained high growth with low inflation, while the consumer price index rose 0.7 pct from a year earlier, fixed-asset investment rose 12.4 pct and retail sales rose 10.3 pct.

	    As long as macroeconomic policy remains continuous and stable, there will not be any unusual changes in domestic demand, he said.

	    He added that overseas demand does present some uncertainties, one of which concerns the changed economic environment in the U.S.

	    However, taking an overall view, there will not be a deep drop in U.S. economic activity, partly because the U.S. economy has a strong basis and there is still room for the country to increase its information technology, and partly because there is still scope for further U.S. interest rate cuts, he said.

	    Since the U.S. has a large budget surplus, and the administration of President George W. Bush is seeking a large tax cut, this should also boost confidence and promote economic recovery in the U.S., he added.

	    The U.S. economy is expected to grow by 1-2 pct this year, Dai said.

	    He said the scope for adjustments in fiscal and monetary policy in Japan is smaller than in the U.S., but given the new measures implemented at Japanese banks, the Japanese economy is also unlikely to undergo a major slowdown.

	    At the monetary policy committee's recent meeting, the committee confirmed its commitment to securing stable money supply growth, while paying close attention to the domestic and overseas economic and financial situation, he said.

	    It also resolved to continue making use of open market operations to adjust money in circulation at commercial banks and inject or withdraw money from circulation, while maintaining interest rate stability and basic 

stability in the yuan exchange rate, he said.

	    The committee resolved to promote adjustments of credit structure, and promote lending to small, mid-sized and hi-tech enterprises, while improving management of refinancing loans in support of agriculture and accelerating lending in support of state-funded infrastructure projects.

	    It also resolved to promote consumer lending, while ensuring banks strengthen management and do not lower the requirements when issuing loans, and do not engage in illegal competition.

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