China to keep prudent monetary policy

Beijing

CHINA could undermine structural reforms if it adopts an excessively loose monetary policy, central bank governor Zhou Xiaochuan said on Sunday, pledging to relax capital controls to help make the yuan currency fully convertible.

Mr Zhou also sought to soothe concerns over the impact of volatile capital flows on China's economy, saying a war chest of foreign exchange reserves provides a buffer and the country has the capacity to deal with short-term speculative outflows.