Banking

China to strenthen liquidity management

(Xinhua)
Updated: 2011-03-24 16:48

BEIJING - An official with China's central bank said Thursday that China should strengthen liquidity management as it is still facing imbalances of international payment and excessive liquidity.

Zhang Xiaohui, director of the Monetary Policy Department of the People's Bank of China (PBOC), said in an article posted on the PBOC website that China's balance of payment surplus was partly due to its export-oriented strategy and related fiscal, trade, price and exchange rate mechanisms.

Related readings:  China's February new loans hit 535.6b yuan  China's foreign trade jumps 44% in Jan  China's trade deficit hits $7.3b in Feb

The surplus in past years has caused excess liquidity because the central bank has had to buy foreign exchanges with the yuan, directly boosting the country's money supply, Zhang said.

"It's a general trend that China's international payment will become more balanced as the country is constantly improving its market system and reforming interest rates, exchange rates and other mechanisms," according to Zhang.

China has owned a large amount of surplus in balance of payment since the latter half of 2002.