Central bank to keep appropriate liquidity, stable yuan

BEIJING - China's central bank said on Monday that it would use various policy tools to maintain appropriate liquidity and reasonable growth in credit and social financing.

The People's Bank of China will continue with a prudent monetary policy and keep its stance neither too loose nor too tight, it said in a statement after the Q2 monetary policy committee meeting.

It said the central bank would improve the financing and credit structures, increase the proportion of direct financing and reduce social financing costs.

The central bank reaffirmed that it would keep the yuan exchange rate basically stable at "a reasonable and balanced level" while improving the exchange rate formation mechanism.

It said China's economic performance remained generally stable, but warned "the complexity of current situation should not be underestimated," underlining a modest recovery in the United States, a fragile recovery in Europe, financial market volatility after the Brexit vote, sluggish growth in Japan and difficulties facing emerging economies.

Latest data showed there remains downward pressure on the economy as the manufacturing-sector purchasing managers' index (PMI), a main gauge of factory activity, posted a slight drop in June.

China's GDP expanded 6.7 percent year on year in the first quarter of this year, the slowest growth since the global financial crisis in early 2009 but still in line with the official 2016 target range of between 6.5 percent and 7 percent.

The second-quarter GDP and an array of economic data, including industrial production, fixed asset investment and consumption, are due for release on July 15.