Zhou staying at central bank

2013-03-17 01:05:34 GMT2013-03-17 09:05:34(Beijing Time)  China Daily
Zhou Xiaochuan answers questions during a press conference in Beijing, March 13, 2013. [Photo/Xinhua]Zhou Xiaochuan answers questions during a press conference in Beijing, March 13, 2013. [Photo/Xinhua]

China's longest-serving central bank governor, Zhou Xiaochuan, 65, won approval from the National People's Congress to extend his tenure on Saturday, which analysts called a plus for continuity of financial policies and increasing independence of the bank.

"Keeping Zhou at the position is a very good thing that helps to maintain stability of monetary policies," said Wu Xiaoling, a former deputy central-bank governor. Zhou has participated in the reform of China's economic system since the 1990s.

Yu Yongding, a former academic adviser to the central bank's monetary policy committee, said there is no better choice than Zhou given his global reputation and sound communication with major central banks worldwide.

"That aspect is very important as global cooperation and communication capability is most needed to tackle the current economic situation."

Under Zhou's watch, China has successfully transformed the big four State-owned banks that were close to bankruptcy into listed commercial lenders, loosened the reins on its currency, and accelerated opening up of its capital account.

But Zhou's stay also stirred debate among some officials and the public, as doubts have intensified over excessive money injection, rapid increase in consumer prices, and white-hot property prices.

"Maybe it's not fair to aim all the gunpowder at him, but my direct feeling is that prices of goods and homes have been growing too wildly in recent years, and ruined the living quality of common residents," said Li Lan, 56, a retired teacher living in Beijing.

At a press conference held on Wednesday, Zhou said his priority this year is to guard against inflation and the country should be on "high alert" of rising prices.

Inflation climbed to a 10-month high of 3.2 percent in February, from January's 2 percent.

The money supply, compared with GDP, will not create an inflation threat, Zhou said. "If we can control the growth of M2 at a reasonable level, it won't lead to sudden price increases."

M2, a broad measure of money supply, exceeded 97.4 trillion yuan ($15.5 trillion) by the end of 2012.

He also vowed to maintain stable credit growth this year in accordance with the 7.5 percent GDP target and the 3.5 percent officially set ceiling for consumer price index.

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