China economy improving, policy flexible: c.bank

Zhou Xiaochuan listens to a question at a news conference during the ongoing National People's Congress (NPC), China's parliament, in Beijing March 12, 2012.

BEIJING (Reuters) - China's economy is showing signs of improvement and monetary policy settings will ensure continuity and flexibility into 2013, central bank governor Zhou Xiaochuan said on Thursday.

Zhou was speaking to reporters on the sidelines of China's Communist Party congress which is meeting to choose new leaders.

The central bank has been fine tuning policy for around a year to help underpin growth in the world's second-biggest economy, which is going through its slackest period of expansion since the depths of the 2008-09 global financial crisis.

The People's Bank of China cut benchmark interest rates in June and July with accompanying steps to give banks more freedom in setting borrowing costs and has lowered reserve ratios for commercial lenders three times since late 2011, freeing an estiamted 1.2 trillion yuan for new lending.

More recently the central bank has relied on large-scale cash injections into the banking system via open market operations to support growth while retaining policy flexibility.

(Reporting by Kevin Yao; Editing by Nick Edwards)