The central bank also said that monetary policies have reached the designed controlling targets.

It said prudent monetary policies were implemented in the first quarter of this year and financial support to economic growth stepped up while adopting measures to minimize financial risks.

According to official statistics, in the first quarter the country's money supply grew steadily.

By the end of March, the outstanding broad money (M2) was 16.4 trillion yuan (US$1.97 trillion), up 14.4 percent from the same period last year.

The outstanding narrow money (M1) was 5.94 trillion yuan (US$0.71 trillion), up 10.1 percent, while the outstanding money in circulation rose by 8.2 percent to 1.55 trillion yuan (US$0.18 trillion).

At the same time, loans by financial institutions increased gradually and credit structures continued to improve.

At the end of March, the country's foreign exchange reserves reached US$227.6 billion, a rise of US$15.4 billion from the beginning of the year. The exchange rate of Renminbi was one US dollar for 8.2774 yuan, remaining stable.

But the report stated some problems still exist in current monetary and credit operation.

It said farmers still have trouble getting loans, commercial banks' loans are over-concentrated on cities and large enterprises, while medium-sized and small enterprises are hungry for loans, and commercial banks' operating mechanism is yet to be improved.

The report recommends some measures for the central bank in the second quarter, including expanding the floating range of the credit interest rate while maintaining a stable level of interest rates.

It also suggests increasing re-loaning to share-holding and urban commercial banks, allowing them to open inter-bank loan business, and further improving financial services to medium-sized and small enterprises.

(China Daily May 23, 2002)