Tue, Jan 10, 2012 - Page 10 News List

China’s central bank promises pro-growth policies

AP, BEIJING

China’s central bank is promising pro-growth conditions this year to support struggling entrepreneurs, but says it will stay prudent amid complex global conditions and inflation pressures.

The announcement following a weekend government planning conference comes as Beijing is promising to channel lending to entrepreneurs who have been battered by weak global demand while keeping consumer prices and surging housing costs in check.

The weekend conference, held to make plans for financial industries for the next five years, ended with no major reform initiatives announced.

At the meeting, Chinese Premier Wen Jiabao (溫家寶) promised more support to the “real economy” — a reference to efforts to channel money to productive businesses while preventing credit from fueling stock and real estate speculation.

The People’s Bank of China echoed that, pledging to “optimize the credit structure to support the real economy” and “especially small and micro-enterprises.”

Still, the bank emphasized it would stick to a “prudent monetary policy” and be ready to fine-tune its approach.

Policymakers face conflicting forces, including slowing export growth, Europe’s debt crisis and pressure for Chinese prices to rise, central bank Governor Zhou Xiaochuan (周小川) said in an interview with Xinhua news agency.

“Overall, in 2012, the world economy has relatively more difficulties and uncertainties,” Zhou was quoted as saying on Sunday after the planning meeting.

The central bank promised to improve operations and risk management in China’s banking industry. However, it made no mention of reforms that economists say are needed, such as allowing market forces to play a bigger role in bank decisions about who can borrow and at what interest rate.

Zhou warned against moving ahead at this point with letting market forces set interest rates, citing uncertain global conditions and decisions by other central banks to hold down interest rates.

“From this perspective, currently it still is not a good time to promote ‘interest rate marketization,’” Zhou said.

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