Emphasis on prudent monetary policy
Print Edition
CHINA has decided to maintain a prudent and neutral monetary policy in 2018 as the country strives to balance growth and risk prevention.
“Prudent monetary policy should be kept neutral, the floodgates of monetary supply should be controlled, and credit and social financing should see reasonable growth,” the Central Economic Work Conference statement said.
The tone-setting words came as China faces the dual task of ensuring stable economic growth and liquidity while averting financial risks accumulated over years of credit binges and lax regulations.
Authorities have maintained a prudent and neutral monetary policy this year, keeping appropriate liquidity levels but avoiding excessive liquidity injections. The central bank has increasingly relied on open market operations for liquidity management, rather than cuts in interest rates or reserve requirement ratios.
The statement reiterated that systemic financial risks should be forestalled. It said the yuan’s exchange rate will be kept basically stable at a reasonable and balanced level.
On the fiscal front, the statement said “the proactive orientation of fiscal policy will be maintained, while the structure of fiscal spending should be optimized.”
Authorities will ensure fiscal support for major fields and projects while reducing regular expenditures.
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