Zhou Xiaochuan Commits to Stable Neutral Monetary Policy in Second Half of 2017


Zhou Xiaochuan has said that the Chinese central bank will remain committed to stable, neutral monetary policy in the second half of 2017.

In speech delivered at the release of the “People’s Bank of China 2016 Annual Report,”┬áZhou said that in 2016 the instability and uncertainty of complex international circumstances became even more pronounced, while China’s endogenous economic drivers remain insufficient, financial risk continues to accumulate, and industrial overcapacity remains a problem.

According to Zhou PBOC will continue to make integrated use of open market operations and liquidity adjustment tools to maintain appropriate levels of liquidity based on the changing supply and demand circumstances of the Chinese banking system, as well as create an appropriate monetary and financial environment for stable growth and supply-side structural reforms.

With respect to financial reforms PBOC’s annual report points out that in 2017 it will continue to focus on the cultivation and improvement of market-based mechanisms for the formation, adjustment and transmission of interest rates; improve RMB exchange rate mechanisms, as well as ensure that the exchange rate remains at essentially stable, rational levels.

The PBOC annual report also flags stable progress in the internationalisation of the RMB, expansion of local currency settlement for bilateral investment and trade as well as increased bilateral currency cooperation.