FT.com / World / Asia-Pacific - China targets slower growth of money supply
FT.com / World / Asia-Pacific - China targets slower growth of money supply
China targets slower growth of money supply
>By Richard McGregor in Shanghai
>Published: January 4 2005 14:01 | Last updated: January 4 2005 14:01
China has set targets for moderately slower money supply and credit growth for this year, according to a statement issued by the official news wire Tuesday night, in further evidence that the government is committed to a gradual rather than abrupt deceleration of the economy.
The People’s Bank of China set a target of 15 per cent for broad money supply growth, below last year’s target of 17 per cent, but ahead of the rate of increase of M2 during the final months of 2004.
M2, the measure of broad money supply, grew 13.5 per cent year-on-year in October, a rate that the government said reflected the fruits of their policies to slow the economy, and is expected to record a rise of about 14.5 per cent for the whole of 2004.
Zhou Xiaochuan, the chairman of the PBoC, said the bank was targeting an%China targets slower growth of money supply
>By Richard McGregor in Shanghai
>Published: January 4 2005 14:01 | Last updated: January 4 2005 14:01China has set targets for moderately slower money supply and credit growth for this year, according to a statement issued by the official news wire Tuesday night, in further evidence that the government is committed to a gradual rather than abrupt deceleration of the economy.
The People’s Bank of China set a target of 15 per cent for broad money supply growth, below last year’s target of 17 per cent, but ahead of the rate of increase of M2 during the final months of 2004.
M2, the measure of broad money supply, grew 13.5 per cent year-on-year in October, a rate that the government said reflected the fruits of their policies to slow the economy, and is expected to record a rise of about 14.5 per cent for the whole of 2004.
Zhou Xiaochuan, the chairman of the PBoC, said the bank was targeting an increase in new lending in 2005 to Rmb2,500bn ($302bn), up from the 2004 target of Rmb2,200bn, according to Xinhua, the news agency.
The targets for both money supply and credit growth are considered to be more indicative of broad policy direction rather than numbers the central Bank and commercial lenders attempt to strictly adhere to.
“They are trying to say that they are going to maintain moderate tighter policies and aim for a soft landing,” said Jonathan Anderson, of UBS, the brokerage, in Hong Kong.“If you took it literally, you would see an acceleration of money supply (from the last months of 2004) and no one expects that.”
The official report, following the PBoC’s planning meeting for 2005, stuck to the government’s standard line on the renminbi, China’s currency, now pegged to the US dollar.
Mr Zhou said that China would “maintain the basic stability of the renminbi exchange rate at a reasonable and balanced level”, repeating Beijing’s consistent response to an issue on which the government faces growing pressure for change.
“We will quicken the development of the forex market, actively and safely push ahead with reform of the renminbi exchange rate formation mechanism,” Mr Zhou was quoted as saying.
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