November 26, 2013 / 7:01 AM / 4 years ago

China says to rely on reform, not loose policy, to underpin growth

BEIJING, Nov 26 (Reuters) - China will rely on market-based reforms to unleash fresh growth drivers to support the economy, not ultra-loose policies, central bank chief Zhou Xiaochuan said on Tuesday.

China’s economic growth is within a “reasonable range” while inflation and employment remain generally steady as the government pushes structural changes, Zhou said in a speech at a financial forum.

“The Chinese government is emphasising reforms to boost the vitality of the market and maintain stable economy growth, rather than relying on ultra-loose fiscal or monetary policy to sustain growth and employment,” Zhou said in the speech, later published on the central bank’s website

A recent Reuters poll that showed China’s economic growth could slow to 7.4 percent in 2014 from an expected 7.6 percent this year - the weakest in 14 years. The government is aiming for 7.5 percent growth in 2013.

Zhou said China needs to maintain relatively strong economic growth, given the pressure for job creation.

He also reiterated the possibility of widening the yuan’s trading band as part of reforms to make the currency more responsive to market forces. He did not elaborate.

Last week, Zhou dangled the prospect of speeding up currency and interest rate liberalisation in comments released as part of a public guide book to reforms after a key party plenum.

In his speech he also repeated that China will quicken the pace of making the yuan fully convertible by reducing controls on cross-border capital flows.

China will also expand quotas for the Qualified Foreign Institutional Investor (QFII) programme and the Qualified Domestic Institutional Investor (QDII) programme, and may scrap quotas altogether when conditions are ripe, Zhou said.

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