CHINA’S central bank will not resort to quantitative easing even as the monetary policies of the world’s major economies are approaching zero interest rates, People’s Bank of China Governor Yi Gang wrote in an article published by Qiushi.

“We should not let the money held by the Chinese people become worthless. ... Maintaining positive interest rates and upward-inclined yield curve is generally conducive to the economic entities, and in line with the Chinese people’s saving culture, thus beneficial to the sustainable development of the economy,” said Yi.

He reiterated the central bank will continue to implement prudent monetary policy, conduct counter-cyclical adjustments, improve monetary policy transmission and keep liquidity reasonably ample.

China’s economic growth slowed to near 30-year lows in the third quarter and industrial profits continued to shrink, and speculation is mounting that China needs to roll out stimulus more quickly and more aggressively, even if it risks adding to debt.

The exchange rate of China’s yuan is decided by supply and demand, we will not play the yuan as a tool and will not resort to competitive devaluation of the yuan, said Yi.

China’s central bank will continue to promote reform of the yuan, and maintain its flexibility and keep it basically stable on a reasonably balanced level, the governor said, adding that China will conduct necessary macro-prudential management in the foreign exchange market when needed.

Yi also said China will strengthen the supervision of property financing markets.

Zhang Xuechun, the deputy director of the research bureau at the People’s Bank of China (PBOC), said at a forum Friday that China has room to ease monetary policy further, but authorities should not be careless in how they use such stimulus options.

“Our monetary policy has space ... but such policy space cannot be squandered at will,” Zhang said.

China needs to improve transparency and disclosure of medium and small-sized banks following recent problems, which have pushed up risk premiums for all such banks, Zhang said.

The central bank will enhance small bank’ ability to finance small enterprises, and deepen market-oriented reforms of interest rates, so that funds can be allocated to efficient enterprises, she said.

China also needs to establish equity and bond markets for high-risk investors, she said without elaborating.(SD-Agencies)