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Chinese policymakers face a dilemma as they need to tighten
credit to contain debt and speculative investment without
triggering a wave of defaults that could destabilize the
financial system.
The country's leaders have called for a "prudent and neutral"
monetary policy in 2017 and for prevention of financial risk,
while keeping the economy on a path of stable and healthy
growth, according to statements following a key economic meeting
this month.
Monetary policy needs to support economic growth and ensure
enough liquidity in the interbank market, but also needs to
target price stability and pay attention to asset bubbles,
Financial News said in the commentary on Saturday.
Policies should also be more targeted, the commentary said.
"Maintain macroeconomic stabilization policies, strengthen
fine-tuning (of policies), but do not implement big stimulus,"
the commentary said, but "explore more targeted ways to solve
structural problems."
The People's Bank of China has not cut interest rates in 14
months, and as the economy has proved relatively resilient, the
central bank has been guiding money market rates steadily higher
in an effort to root out speculators.
But tighter liquidity has led to stress in money markets in
recent weeks as bonds fell and interbank rates spiked, with
markets not calmed until the central bank made a significant
liquidity injection.
(Reporting by Elias Glenn; Additional writing by Ryan Woo;
Editing by Hugh Lawson)
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