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China to increase money supply in 2009
2008-12-14
BEIJING (AFP) - China said it wants to increase money supply by 17 percent in 2009 as part of new measures to keep the world's fourth-largest economy ticking over in the face of the global slowdown. The government has taken a number of measures to boost domestic demand and cope with the downturn, including repeated interest-rate cuts and a four trillion yuan (586-billion-dollar) stimulus package announced last month. In the latest steps, posted on government websites late on Saturday, China said it would aim to expand the broad M2 measure of money supply by 17 percent. It said liquidity for banks would be addressed with shorter term bills, and that more rate cuts and foreign exchange flexibility would be considered. "In order to face the attacks of the global financial crisis... we must expand the scope of financial supports," the State Council or cabinet said. The new measures are "aimed at expanding domestic demand," it said. China's M2 money supply growth target for 2008 was 16 percent. Among other proposals, the cabinet urged the completion of the Growth Enterprise Board, a Nasdaq-style trading entity aimed at helping small start-ups gain better access to capital markets. After years of blistering double-digit growth that has turned once agrarian China into a world economic powerhouse, the economy grew at only nine percent in the third quarter, and fourth-quarter numbers are set to be even worse. China fears that growth at less than eight percent will fail to keep unemployment in check and provide jobs for the vast numbers of people entering the workforce each year in the world's most populous nation. "If China's GDP growth rate falls to six or seven percent, the quality of development would be seriously impacted," Liu Mingkang, chairman of the China Banking Regulatory Commission, was quoted as saying Saturday. "China's economic and financial outlook is not optimistic and Chinese banks will face stern challenges in 2009," Liu said. The growth rate of China's imports and exports has been declining for six months. October's year-on-year rise was 46 percent, compared to 73 percent in May, according to the latest figures on the Beijing district's customs website. China's export-driven economy is already feeling the brunt of the global economic slowdown, with plants facing huge overcapacity as workers are laid off and unsold goods stockpiled. China, Japan and South Korea held a rare three-way summit on Saturday, aimed in part at finding policy proposals to save the three Asian nations from the worst effects of the crisis. "The Chinese government will take responsibility and face up to the various risks while working together with East Asian countries to overcome the crisis," Chinese Prime Minister Wen Jiabao said.
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