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China reaffirms moderately loose monetary policy
(Xinhua)
Updated: 2010-01-07 11:05
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Commitment to stable yuan
The central bank reassured its commitment to keeping the yuan stable, saying it would keep the renminbi exchange rate "basically stable" at a "reasonable and balanced level".
"China will further improve the yuan exchange rate mechanism, acting on its own initiative and in a controllable and gradual manner," it said.
Zhang Xiaoqiang, vice minister in charge of the National Development and Reform Commission, said in a speech released Tuesday that China's currency was facing renewed pressure to appreciate owing to monetary policies in developed countries, a weakening dollar and China's economic recovery.
A stronger yuan would likely spur massive inflow of speculative money, making liquidity management more difficult, he said.
However, the Chinese government has been firm in its stance about a stable yuan. Premier Wen told Xinhua in December that China would not yield to foreign pressure for the appreciation of the yuan in any form.
"A stable Chinese currency is good for the international community," Wen said.
Property risks
The central bank would keep a close watch on the real estate market and "strictly" implement the credit policy for the real estate sector to ensure a healthy development of China's housing finance, according to the statement online.
The record lending and favorable purchase policies in 2009 had lifted property prices in China. In November, home prices in 70 major cities rose 5.7 percent from a year earlier, accelerating from October's 3.9 percent.
Premier Wen pledged in December that the government would use taxes and interest rates on loans to stabilize property prices as prices had risen too quickly in some areas.
The government started to reimpose a sales tax on homes sold within five years of their purchase from Jan 1 this year, after cutting the period to two years in January 2009 to boost the property market.
In addition, the central bank vowed to deepen reform of financial enterprises in 2010. "The mechanism for maintaining financial security will be improved and innovation of financial products will be accelerated," said the statement.
