The bank will use various policy tools to maintain appropriate liquidity and reasonable growth in credit and social financing, it said in a statement after the Q2 monetary policy committee meeting.

It said that it will keep its stance neither too loose nor too tight and would improve the financing and credit structures while increasing theproportion of direct financing and reducing social financing costs.

The bank said it would keep the yuan exchange rate basically stable at “a reasonable and balanced level” and also improve the exchange rate formation mechanism.

Underlining a modest recovery in the US economy, a fragile recovery in Europe, volatility in world financial markets post Brexit vote, sluggish growth in Japan, and difficulties being faced by emerging economies, the bank warned that “the complexity of current situation should not be underestimated.”

There remains a downward pressure on the Chinese economy, which can be seen in a slight drop in manufacturing sector's purchasing managers' index in June, the bank said.

In January-March 2016 quarter, China's GDP expanded 6.7 per cent year-on-year, the slowest growth since early 2009 when the global financial crisis led to a fall in GDP. (RKS)

Fibre2Fashion News Desk – China