Chinese economy to expand at steady pace: central bank governor

Economic indicators suggest that the Chinese economy will continue to expand at a steady pace, while inflation is expected to stay mild amidst a stable macroeconomic environment, China's central bank governor said at a meeting of the International Monetary Fund (IMF)'s policy-setting committee here on Saturday.

China's real GDP growth registered 7.4 percent in the first half of this year, while inflationary pressure remains subdued, with the year-on-year CPI and PPI inflation rates registering 2.2 percent and minus 1.6 percent, respectively, in the first eight months, Zhou Xiaochuan, governor of the People's Bank of China, told the Thirtieth Meeting of the International Monetary and Financial Committee.

Chinese authorities would maintain consistency and stability of macroeconomic policies in order to maintain growth at a reasonable rate, promote employment and guide inflation expectations, he noted.

Under a prudent policy stance, China will continue to conduct appropriate credit and macroprudential policies to ensure reasonable growth in money, credit and social financing, he said, adding that it will continue to implement proactive fiscal policy while keeping the deficit ratio unchanged.

China would continue to deepen fiscal and tax reforms to establish a transparent, efficient and sustainable modern fiscal framework, and would continue to exercise regulatory prudence in supervising bank and nonbank financing and monitor potential risks in the financial system closely, Zhou said.

In the meantime, he said, China will push forward structural adjustments and reforms.

The country will continue to carry out market-based interest rate reform, further improve RMB exchange rate reform, promote the role of the market in its capital market, and push forward reforms of the fiscal system, state-owned enterprises and financial institutions, he said.

In regard to the IMF reforms, Zhou said "we are deeply disappointed with the lack of progress in implementing the 2010 quota and governance reforms since the last meeting, and that the IMF continues to rely on provisional borrowing arrangements to boost its lines of defense."

Zhou urged the United States to ratify the 2010 reforms expeditiously to ensure that the IMF has the required legitimacy and credibility to promote cooperation, as well as the capacity to respond to future crises.

The reform plan includes a doubling of IMF quotas and a shift in quotas to dynamic emerging markets and under-represented countries, and a proposed amendment to reform the executive board that would facilitate a move to a more representative and all- elected 24-member board.

Most of the IMF's 188 member nations have approved the reform package, while opposition from the U.S. Congress have blocked the United States, which has the largest voting share on the IMF board and the unilateral veto power over IMF decisions, to ratify the deal.

If the reform package is implemented, four large emerging economies, namely China, India, Russia and Brazil, will all become top 10 shareholders of the Washington-based global lender.