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Central bank stresses inflation management amid credit boom

(Xinhua)
Updated: 2009-11-12 08:54

China's central bank said on Wednesday that it will step up efforts to balance inflation perception and economic growth as it will continue to implement the relatively easy monetary policy.

"We will make the policy more flexible and sustainable and keep policy abreast with economic climate and price changes," the People's Bank of China said in the latest quarterly report of monetary policy on Wednesday.

As the economy is on the road to recovery with easy credit, we will closely watch the price changes and keep them stable in the long run, it said.

Related readings:  China's new loans sharply down in Oct  Big 4 banks Oct new loans hit 136b yuan  China's new loans to hit 10t yuan in 2009  Economist: Inflation not to happen in China within 2 years

Chinese banks lent a record 8.92 trillion yuan ($1.31 trillion) in the first ten months, far exceeding the 5 trillion yuan annual target, to fuel the economic recovery.

Credit expansion slowed to a year-low in October as the new yuan loans shrank to 253 billion yuan ($37.06 billion) from 516.7 billion yuan a month earlier, as corporate demand cooled down after the lending spree.

The report said the nation's stimulus package implemented since last November had held back price falls and eased deflation fears. However, the loose credit conditions across the globe also pushed up commodity and asset prices, which shaped "a certain perception for inflation".

The central bank noted it will keep the credit growth at a "reasonable" pace and make it "sustainable and balanced".

The report also said investment project should be "reasonably" planned, and private business should be given more support.

Market should play a bigger role in the resource allocation to make the economic growth dependent on its own vigor other than outside forces, said the report.