Beijing will use a combination of monetary tools to tackle inflation and steer the mainland towards a soft landing, People's Bank of China governor Zhou Xiaochuan says.
Zhou's comment came as business activities in the non-manufacturing sector rebounded in March on rising market demand, strengthening the case for the world's second-largest economy escaping a bruising slowdown.
The non-manufacturing Purchasing Managers' Index (PMI) rose to a revised 58 last month, from February's 57.3 and January's 55.7, the China Federation of Logistics and Purchasing (CFLP) said yesterday. A PMI reading above 50 indicates expansion from the previous month; one below 50 indicates contraction. Two days ago the federation reported the manufacturing PMI was 53.1 in March, the fourth straight month it has risen and its highest level since March last year.
All major sub-indices under the non-manufacturing PMI rose in March, the federation said.
'I think that for China and other economies, the policy goal is gradually to bring inflation down so it's a soft landing,' Zhou told a panel session at the Boao Forum for Asia in the island province of Hainan.
Zhou said the US Federal Reserve should consider other countries' interests when setting policies that create liquidity risks for emerging economies. 'We understand that quantitative easing is one possible choice. But it is very difficult to control the flow of liquidity,' he said. 'While it is hoped that money injected into the US economy will stay there, inevitably some emerging economies will suffer too much capital inflow.'