China’s monetary policy has been always unconventional, Zhou Xiaochuan, governor of China’s central bank, said at the Boao Forum for Asia Friday.

“Despite the implementation of the reform and opening-up policy, China is still in a period of transition and does not meet all of the necessary economic conditions to implement a traditional monetary policy,” the governor said.

Zhou believed China’s unconventional monetary policy is based on a host of financial reforms.

He said, “We must rectify and improve the banking sector, and further develop the capital market in an unconventional way.”

The unconventional monetary policies have played a big role in preventing China from slipping into recession in 1997 and 2008. In the Asian financial crisis in 1997, China boldly rolled out aggressive fiscal and monetary policies to create a very low interest rate environment. During the 2008 financial crisis, China unveiled a 4 trillion yuan stimulus package.

Commenting on these policies, Zhou said, “The policies were not just aimed at sustaining growth; they also maintained financial stability.”

Premier Li Keqiang said on Thursday that China would not introduce a large short term stimulus package and the government was focusing on its medium and long term goals.

The central bank considers inflation, employment and economic growth when setting monetary policy, and inflation is given priority, Zhou said.

The consumer price index (CPI) increased 2.4 percent year on year in March, up from 2 percent in the previous month, according to data released on Friday.

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