China's central bank governor Zhou Xiaochuan said Wednesday the nation's high growth of broad money supply M2, if kept at a proper level, will not result in sudden inflation, adding the bank aims high in controlling consumer prices.
Zhou made the remarks in response to a question of whether China's high growth of M2, which covers cash in circulation and all deposits, will bring inflation risks.
China aims to keep its M2 to grow at 13 percent this year and targets the inflation rate at 3.5 percent.
Countries with high saving rate and hefty indirect financing activities usually have high M2 growth, Zhou explained at a press conference on the sidelines of the annual legislative session.
In terms of the M2 to GDP ratio, Japan has higher ratio than China, but it suffers from deflation rather than inflation, he said.
"As long as we keep M2 growth at a proper level, drastic consumer price hike will not happen," he said.
The 13 percent growth of M2 is smaller than that of last year, which indicates that the government puts more emphasis on keeping stable consumer prices, Zhou said.
The M2 growth forecast also means China's monetary policy will stay prudent and neutral, he said.
China implemented a relatively easy monetary policy in 2008 to cope with the global financial crisis. At the end of 2010, the monetary policy was turned to prudent with the economy gradually recovering.
How we face 'getting old before getting rich'
Feedback
RSS
