China will keep its monetary policy loose until the end of 2010 to ensure growth due to uncertainties in the global recovery, Chinese media said Thursday, citing a senior central bank official. "The central bank will continue to maintain liquidity in the banking system to stimulate economic recovery," Su Ning, vice governor of the People's Bank of China, was quoted as saying on the website of the Economic Observer newspaper.
"Liquidity will continue to increase even if it may not expand every month. Some fluctuation in a certain month does not mean the central bank has changed its policy," he said, adding the policy would continue through 2010. Su's remarks came amid market speculation that the central bank might hike the reserve requirement ratio for commercial banks in the fourth quarter of 2009 or the first half of next year, the report said.
Su said maintaining stable growth remained a key task of the central bank as the global economy was unlikely to recover in the short term and consumer price growth in China was still negative, the paper said. Chinese lenders extended 410.4 billion yuan (60 billion dollars) in loans last month, rebounding from 355.9 billion yuan in July, indicating the government may not put as big a squeeze on credit as many had feared.
Fears had been mounting in China that Beijing was looking to begin restricting lending, which reached 1.53 trillion yuan in June and a massive 7.4 trillion yuan in the first six months of the year. The Chinese economy grew 7.9 percent in the second quarter after a 6.1 percent expansion in the first three months of 2009, largely underpinned by a four-trillion-yuan stimulus package the government unveiled in late 2008.