Yi Gang, vice governor of the People’s Bank of China, made a speech at the last day of the International Monetary Fund and the World Bank annual meeting Sunday here to explain the monetary policy of China.
Yi stressed that the most important job for central bank is to control inflation. China is developing dramatically, and local governments have desires of pursuing higher growth, so the central bank need to remind the governments the danger of inflation.
He said the moral explanation is not enough, so the central bank has to use some tools, including required reserved ratio, open market operation, and exchange rate policy, to control the growth rate in a manageable range.
Yi said China is in the process of opening up to the world, so the macro economy policy in China has to consider not only domestic problems, but also external issues. China is facing the dual challenges to balance the internal and external markets.
China made a lot of efforts on transforming China’s economy from centrally planed economy to market oriented one in recent years, including banking reform, interest liberalization, and exchange reform, he said.