The Monetary Policy Committee of the People's Bank of China also suggested at its regular meeting for the second quarter that the market-oriented reform of interest rates should proceed in a steady way.

The meeting held that so far this year China's economic development had been good despite the unexpected impact of severe acute respiratory syndrome (SARS). The central bank continued to implement prudent monetary policies and operate various financial services to fight the disease.

By the end of May, the outstanding broad money (M2) was 20 trillion yuan (US$2.42 trillion), up 20.2 percent from the same period last year; outstanding loans were 14.4 trillion yuan, a rise of 1.26 trillion yuan from the beginning of the year, indicating that China's financial industry is operating smoothly, according to the meeting.

The meeting analyzed the current domestic and international economic and financial situations, and discussed policy measures to be taken.

Members of the committee held that China should continue the policy of expanding domestic demand, continue to implement prudent monetary policies, maintain the continuity and stability of monetary policies, adopt various monetary policy tools in a flexible way, reinforce open market operations, maintain steady growth of money supply and protect the good momentum of economic and financial development.

The meeting cautioned that efforts should be made to prevent potential financial risks in the real estate sector and repetitive construction projects, step up loan risk alarm and supervision mechanisms and further rationalize loan structures, so as to prevent new financial risks.

(Xinhua News Agency June 24, 2003)