China’s central bank has announced plans to implement a “moderately loose” monetary policy in 2024, aiming to keep the exchange rate of the yuan stable at a reasonable and balanced level.
At a press conference in Beijing on Tuesday, Xuan Changneng, deputy governor of the People’s Bank of China (PBOC), highlighted the positive results of the country’s monetary policy over the past year. “Overall, credit and liquidity have grown reasonably, yielding favorable outcomes,” Xuan said.
Stable Growth in 2023
By the end of December last year, total social financing—a broad measure of credit and liquidity in the economy—expanded by 8% year on year, according to PBOC data. Yuan-denominated loans increased by 18.09 trillion yuan (approximately $2.52 trillion) in 2023, while the broad money supply, or M2, rose by 7.3%.
“The renminbi has remained basically stable under complex circumstances,” Xuan noted. “The Chinese currency has performed relatively well among major currencies, playing a positive role in stabilizing the economy and trade.”
By the end of 2023, the China Foreign Exchange Trade System yuan exchange rate composite index, which measures the yuan’s exchange rate against a basket of currencies, stood at 101.47—up 4.2% compared to the previous year.
Looking Ahead to 2024
The PBOC plans to strengthen counter-cyclical adjustments in the coming year, adapting to both domestic and global economic conditions. “We will fine-tune the intensity and timing of policy measures as needed to support economic and social development goals,” Xuan stated.
A combination of monetary policy tools will be utilized to maintain sufficient liquidity and foster a supportive environment for financing, he added.
Confidence in Yuan Stability
Li Bin, deputy head of the State Administration of Foreign Exchange, expressed confidence in the yuan’s stability. “The renminbi is well-positioned to maintain its stability,” Li said, adding that the regulator expects a robust rebound in the Chinese economy, a stable overall balance of international payments, and growing resilience in the foreign exchange market.
Xuan also emphasized a comprehensive approach to strengthen the resilience of the foreign exchange market. “We will stabilize market expectations and enhance market oversight,” he said. “Actions will be taken to correct pro-cyclical behaviors, address disruptions to market order, and proactively mitigate the risk of excessive fluctuations in the yuan’s exchange rate.”
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China's central bank reaffirms 'moderately loose' monetary policy
cgtn.com
