Chinese Central Bank Paying Close Attention to Inflation at Home and Abroad, Will Not “Excessively Issue Money”

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The People’s Bank of China (PBOC) has committed to keeping monetary policy on a tight leash, following cuts to the policy rates for its short and medium-term open market instruments in August.

“Since the start of the pandemic, China has implemented normal monetary policy and not engaged in excessive stimulus, in order to leave room for subsequent adjustments to monetary policy,” said Ruan Jianhong (阮健弘), head of PBOC’s statistics department at the 2022 China International Finance Annual Forum (2022中国国际金融年度论坛) in Beijing on 2September.

“The next step will be for monetary policy to continue to effectively perform cross-cyclical adjustments.

“At the same time we are paying close attention to domestic and overseas inflation trends, and we will not engage in flood-style irrigation, not excessively issue money, and maintain the fundamental stability of price levels.”

Ruan stressed the need for the financial sector to make “servicing the real economy the fundamental point and the starting point”, particularly in the wake of the Covid pandemic.

“Since the start of the year, finance servicing the real economy has helped the economy to recover and grow, and continually given impetus to transformation of the real economy.

“PBOC has expanded the intensity of stable monetary policy implementation, made use of the dual qualitative and structural roles of monetary policy tools, and endeavoured to raise the quality and efficiency of financial services for the real economy.”

Ruan pointed to efforts by PBOC to expand financial inclusion micro-and-small loans, alongside medium and long-term lending for infrastructure development, and improvements to the carbon emissions market.

He also highlighted efforts to further open up and reform China’s financial sector, and drive further internationalisation of the renminbi.