Central bank drains more money from market

BEIJING - China's central bank withdrew more money via open market operations for the second consecutive day Friday.

The People's Bank of China conducted 30 billion yuan ($4.37 billion) of reverse repos, a process by which the central bank purchases securities from banks through bidding with an agreement to sell them back in the future.

The move saw a net 20 billion yuan drained from the market Monday, offset by 50 billion yuan in maturing reverse repos.

The operations included seven-day reverse repo priced to yield 2.35 percent, 14-day contracts with a yield of 2.5 percent, and 28-day agreements with a yield of 2.65 percent, according to a central bank statement.

China's monetary policy will be prudent and neutral in 2017, which will help prevent a rapid rise in debt levels and asset bubbles, central bank economist Ma Jun said in a statement the central bank sent to Xinhua Thursday.

The policy stance will also help keep economic growth at a reasonable pace and ensure inflation is at a stable level, Ma said.

According to remarks Ma made at a meeting in Singapore, China is seeking to further open up its bond market and create conditions for inclusion of its bonds in major global indices.

Ma said the State Administration of Foreign Exchange was working to improve rules allowing overseas non-central bank institutional investors to participate in the domestic foreign exchange derivatives market.

The central bank will also explore ways to expand trading hours at the interbank bond market and enhance international cooperation on bond market infrastructure, according to Ma.

A statement released by the central bank on Tuesday showed a falling bad loan ratio and better profits for banks last year.

Chinese lenders saw the ratio of their non-performing loans fall to 1.74 percent at the end of 2016, slightly down from 1.76 percent a quarter ago.

Banks reported faster profit growth thanks to a firming economy. Net profits of commercial lenders increased 3.54 percent year on year, up 1.11 percentage points from a year ago.