June 20, 2013
Translated by Zhu Na

On June 19, Premier Li Keqiang chaired an executive meeting of the State Council which stated that credit should be guided to support strategic industries in the country and that a prudent monetary policy must be maintained. Experts have said this signals that the government’s monetary policy won’t be relaxed.

Industrial Bank chief economist Lu Zhengwei (魯政委) said that the main takeaway from the meeting was the need for financing to support the economy. Other key issues discussed were resolving the issue of surplus production capacities, supporting small and very small businesses and the agricultural industry, helping to promote consumption, and promoting overseas investment for Chinese enterprises.  

Peng Wensheng (彭文生), chief economist with China International Capital Corporation Limited, says that given the weak state of the economy, there’s a possibility that monetary policy will be adjusted slightly in the short term, but there’s unlikely to be another large scale stimulus. 

Liu Yuhui (劉煜輝), chief economist with Huatai Securities, says that the efficiency of capital investment has been in serious decline and that its ability to deliver real economic growth is falling lower and lower.

The meeting also discussed expanding the use of foreign exchange holdings and foreign exchange loan platforms. At the beginning of the year, the State Administration of Foreign Exchange established a loan office to handle trusted loans of the country's foreign exchange reserves in order to support enterprises going abroad to invest.

Links and sources:
Caijing:專家：中央政府釋放貨幣政策不放松取向