News & Reports News Year 2012 May , 2012 PBOC says challenges remain for economy

PBOC says challenges remain for economy

CHINA'S economy is facing increasing challenges and authorities will keep monetary policies "prudent" and "flexible" to sustain economic growth, a central bank report said yesterday.

Consumption and service industries in China still have a huge potential to grow, but the country faces increasing pressure from global economic uncertainties, inflation, industrial overcapacity and difficulties for small companies, according to the annual report posted on the website of the People's Bank of China.

The report contained comments from central bank Governor Zhou Xiaochuan dated April 18, which drew conclusions about China's financial market in 2011 and urged the financial sector to better serve the real economy this year.

The report was released after the State Council, China's Cabinet, and top leaders, including Premier Wen Jiabao and Vice Premier Li Keqiang, vowed to boost the economy with more investment and tax cut plans.

An article carried yesterday by a newspaper run by the central bank said China's economy will keep growing at a stable pace this year.

Economists expect the central bank to cut the reserve requirement ratio two or three more times this year, but it may keep interest rates unchanged.

The PBOC will also accelerate liberalization of the tightly-controlled interest rates and improve supervision of private lending and local government financing vehicles, the report said.