Easy Monetary Policy for 2010

Su Ning, deputy governor of the People's Bank of China, the country's central bank, said at the ongoing session of the CPPCC that China's broad money supply expect a 17 percent year-on-year increase this year, or RMB 7.5 trillion (US$1.1 billion), indicating a relatively easy monetary policy.

"If M2 (the broad measure of money supply) growth is 2 to 3 percentage points higher than the combined growth of GDP and CPI, the monetary policy could be seen as easy," said Mr. Su.

Chinese Premier Wen Jiabao said Friday in the government work report submitted to the NPC that China targeted an approximate 3 percent rise in consumer prices and 8 percent GDP growth this year.

Su further believed the 17 percent increase in the broad money supply would be able to support the ongoing economic recovery throughout the country.

China's financial institutions lent a record RMB 9.6 trillion in new yuan-denominated loans last year, almost double that of the previous year, to spur the economy amid the global downturn. But it was accompanied by soaring property prices and rising expectations of possible inflation.

Su said the RMB 7.5 trillion in new lending this year should speed up completion of projects under construction, rather than support new projects.

(Source: China Daily)