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China vows to continue prudent monetary policy

Source:   Time:

China vowed on Wednesday to earnestly implement its "prudent" monetary policy in a bid to set the economy on the right track as uncertainties abound both at home and abroad.

To realize this year's economic and social development goals, China needs to properly coordinate the relationship between monetary supply and structural overhaul as well as checking inflation and advancing economic growth, according to a statement released after an executive meeting of the State Council, presided over by Premier Wen Jiabao.

The statement said China will adopt multiple tools, including an open market operation, a bank reserve requirement ratio and interest rate adjustments to check market liquidity.

It also called for further improvements in its exchange rate formation mechanism.

The yuan, China's currency, rose to a new high of 6.5401 per U.S. dollar on Monday. In terms of its central parity rate, the yuan has risen more than 1.2 percent against the U.S. dollar this year.

The government will guide commercial banks to step up credit backing to key industries and small- and medium-sized enterprises, according to the statement.

It said China should strive to keep the ratio of medium- and long-term loans to short-term loans at a reasonable level and increase the weight of direct financing to trim the impact of monetary factors on inflation while satisfying the financial demand of the real economy.

At the meeting, Premier Wen also stressed the importance of keeping prices stable and pledged to further efforts to rein in runaway home prices.

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