2003 Fourth Quarter China Monetary Policy Implementation Report

Author: Monetary Policy Analysis Group of the People's Bank of China
Publisher:
Publish Date: 2004-04-01
Features: 2003 was an unusual year. Under the correct leadership of the Party Central Committee and the State Council, China's national economy overcame various difficulties, including the SARS epidemic, and showed a positive development trend with accelerated growth, improved efficiency, and enhanced vitality. The gross domestic product reached 11.7 trillion yuan, growing by 9.1%, with per capita income exceeding $1,000. However, some contradictions and issues affecting the sustainable and healthy development of the economy and finance emerged during the rapid economic growth, such as blind and repetitive construction in some industries, and "bottleneck" constraints in energy and transportation that had not been seen in years. Inflationary pressure also increased. By the end of 2003, the broad money supply (M2) stood at 2.21 trillion yuan, up 19.6% year-on-year. The growth in bank loans was substantial in the first three quarters of the year but was effectively controlled in the fourth quarter. By the end of 2003, the total outstanding loans of all financial institutions (in both RMB and foreign currencies) reached 1.7 trillion yuan, an increase of 300 billion yuan from the beginning of the year; the total deposits (in both RMB and foreign currencies) stood at 2.2 trillion yuan, an increase of 370 billion yuan from the end of the previous year. The base money supply stood at 523 billion yuan, up 16.7% year-on-year. The excess reserve ratio of financial institutions was 5.38%. The overall interest rate level and money market interest rates remained stable. By the end of 2003, China's foreign exchange reserves reached $403.25 billion, an increase of $116.84 billion from the beginning of the year, making it the year with the largest increase in foreign exchange reserves. The RMB exchange rate at the end of the year was 1 USD = 8.2767 CNY.