China to continue pursuing loose monetary policy to spur recovery
30 Jul 2009
China's central bank will adopt a loose monetary policy to support the country's economic recovery even as shares plummeted to levels not seen in last eight month, the bank said.
The People's Bank of China (PBoC) published remarks by Su Ning, one of its vice governors after the five per cent slump in the market on Wednesday. In a statement the vice governor said the bank would continue to consistently apply appropriately loose monetary policy and consolidate the economic recovery momentum.
The fall, which was the steepest single day plunge since 18 November also rippled down Wall Street and other markets across the world.
Earlier this week two top Chinese commercial banks – Industrial and Commercial Bank of China and China Construction Bank – had sought to cap loans as regulators sounded warnings of credit risks.
Chinese regulators have so far given a free hand to banks to support their liberal lending in hopes of scripting an early recovery on easy liquidity. However, in recent weeks they have demanded that funds be channeled towards productive uses.
The bank has said coupled with a loose monetary policy it intended to use market tools to control lending growth to usher in the nation's economic recovery.
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