BEIJING Dec 31 China should cut banks' reserve
requirement ratios (RRR) in 2013 to support economic growth
while widening the yuan's floating range to make it more
flexible, the head of the cabinet's think-tank said in comments
published on Monday.
Chinese leaders have promised to maintain a prudent monetary
policy and pro-active fiscal policy in 2013, leaving room for
manoeuvre in the face of global economic risks while deepening
reforms to support long-term growth.
"We should keep appropriate base money growth through
various measures, cut RRR at the proper time based on changes in
monetary conditions," the China Securities Journal quoted Li
Wei, head of the Development Research Centre (DRC), as saying.
Li is a top government adviser and it is unclear if his
views will be heeded by policymakers.
The People's Bank of China, the central bank, cut interest
rates twice between June and July and lowered banks' reserve
requirement ratios (RRR) three times after late 2011 to free up
more funds for bank lending.
But it has refrained from cutting rates or RRRs since,
opting instead to inject short-term cash via open market
operations into money markets to avoid fanning inflation and
Li also said that China's renminbi currency should be
allowed to move in a wider range while its real effective
exchange rate should remain relatively stable.
In April China doubled the size of the yuan's daily trading
band against the dollar to 1 percent to let the market play a
bigger role in setting the yuan's value.
The government should cut tax burdens for companies and
increase central government fiscal support for local
authorities, Li added.
Data suggests China's economy, the world's second largest,
is recovering in the fourth quarter after seven straight
quarters of slowing growth, thanks to pro-growth policies rolled
out by the government in recent months. But the outlook remains
cloudy due to global risks.
In a separate article, the China Securities Journal quoted
Zhang Xiaoqiang, vice head of the National Development and
Reform Commission (NDRC), the country's top planning agency, as
predicting the economy could grow 7.5 percent in 2013, while
consumer prices could rise 3.5 percent.
Yi Xianrong, an economist at the Chinese Academy of Social
Sciences, another top government think-tank, said in separate
remarks that the central bank should be cautious in loosening
policy in 2013 to avoid inflation and property risks.
"Large amounts of bank credit will flow into the property
market if the government further loosens monetary policy in
2013," Yi told the official Financial News.
China's property market has shown signs of warming up in
recent months partly due to monetary easing, despite the
heavy-handed official restrictions on home buying.