BEIJING Dec 30 China's economy is on a steady
growth path as 2016 ends, supported by a housing boom and
billions in government investment, but the mood of policymakers
is more cautious than celebratory as they face "complexity" in
the new year.
Controlling risks has been a constant refrain in recent
months as the focus of policymakers switches to taming asset
bubbles and checking unbalanced growth stemming from efforts to
fuel the economy with credit.
The central bank - while reaffirming a long-standing
commitment to prudent policy - said on Friday it would pay more
attention to maintaining a "neutral" stance and ensure that it
is "neither too tight nor too loose".
"At present, China's economic and financial operations are
generally stable, but the complexity of the situation cannot be
underestimated," the People's Bank of China (PBOC) said.
Bank lending is on pace to top 2015's record 11.71 trillion
yuan ($1.7 trillion), helping to stoke a housing boom that saw
prices rise a historic 12.6 percent year-on-year in November,
while fixed asset investment by state firms is growing more than
But growth has become more imbalanced this year as the
effectiveness of new credit declines and companies and
individuals face mounting debts, economists say.
Policy insiders expect monetary policy to tilt towards
slight tightening in 2017 as the government tries to strike a
balance between supporting the economy with ample credit and
preventing a destabilising build-up in debt.
Central bank adviser Sheng Songcheng told Reuters in an
interview on Thursday that interest rates in China were already
on an upward trend as the economy improved.
In the financial markets, China's blue-chip stock index
ended the year more than 11 percent lower while the Chinese yuan
plumbed an 8-1/2 year low.
Primary money rates rose this week and were largely higher
this year, driven by the PBOC's tighter liquidity stance in the
second half aimed at taming risks.
The key interbank rate rose more than 25 basis points for
the year, indicating tighter monetary conditions, after falling
sharply in 2015.
Market participants also said the falling yuan has had a
large negative impact on the money market in the second half,
with the central bank buying up Chinese currency and shrinking
The PBOC said in Friday's report it would push reforms of
the yuan regime, while keeping the currency basically
The central bank used the same wording about the currency in
last year's report.
The yuan ended 2016 with its biggest annual loss since 1994,
putting it on track to be the worst-performing major Asian
currency this year.
Expectations for a weaker yuan have contributed to
significant capital outflows as China's foreign currency
reserves fall to the lowest level in more than five years.
As Chinese firms step up overseas investment, which also
contributes to capital outflows, policymakers announced plans
this week to further open China's markets to foreign investment.
Any further opening up to foreign firms should help redress
an imbalance in investment flows which is likely to rise to an
unprecedented 335 billion yuan this year as outbound investment
rose more than 55 percent in the first 11 months of 2016.
The state planning agency said on Friday the country would
seek to open up, in an "orderly way", sensitive areas such as
telecoms, education and internet to foreign investment.
($1 = 6.9410 Chinese yuan renminbi)
(Reporting by Elias Glenn, Kevin Yao, Yawen Chen, Winni Zhou
and Jackie Cai; Editing by Ryan Woo and Robert Birsel)