China lists epidemic control as monetary policy priority

The control of the novel coronavirus epidemic is at the top of the agenda for the People's Bank of China (PBOC), with more credit support pledged to contain the epidemic, the central bank said on Feb 19.

The bank will help companies tide over the difficult period by lowering lending rates, increasing credit support and providing more medium- to long-term loans, the PBOC said in its quarterly report on monetary policy implementation.

National and local banks should take full advantage of the liquidity released through the central bank re-lending program to provide targeted credit support for companies that directly participate in epidemic control, the report said.

The epidemic has had some impact on the Chinese economy, but the shock will be short-lived and will not change the country's sound economic fundamentals, the report said.

The central bank said it would monitor short-term fluctuations in the consumer prices brought by the epidemic, adding that "there is no basis for long-term inflation or deflation."

It will continue to implement prudent monetary policy, make proper counter-cyclical adjustments, keep liquidity at a reasonable and ample level, and make sure the increase in credit and social financing is in line with economic development, the report said.

The central bank will make good use of various monetary policy tools including targeted cuts in the reserve requirement ratio and the re-lending program to guide more funds into small companies, the private sector and the manufacturing industry, the report said.

The bank will accelerate the establishment of a long-term mechanism for real estate financing, bearing in mind that "housing is for living in, not for speculation," the report said, adding that the property sector should not be used as a short-term stimulus to the economy.

The central bank will continue to carry out interest rate and exchange rate reforms to make them more market-oriented, the report said, adding that macro-prudential management should be strengthened to keep the yuan exchange rate basically stable at a reasonable and balanced level.