China's central bank has announced that the country's financial market remained stable in the first half of this year. And that its tightening monetary policies are beginning to have an effect. But experts are suggesting the central bank relax its current policies and rely more on financial policies to fight inflation.

The People's Bank of China said on Monday that by the end of June, China's broad measure of money supply, M2, had increased more than 17 percent year-on-year to 44 billion yuan, growing slower than it did for the same period last year. The growth rate of new yuan-denominated loans also slowed. In the first half of the year, outstanding loans grew around 14 percent to 28 trillion yuan, with its growth down 2 percentage points from the same period last year.

Also in the first half, yuan-denominated deposits increased nearly 5 trillion yuan. Experts say the figures indicate the government's macro-control measures have had their intended effect.

He Fan, vice Director of Int'l Financial Research Center, CASS, said, "The slowdown in the growth of the money supply means if the central bank wants to curb inflation, it has to dial down the tap of the money supply. The central bank figures also showed a decline in the growth of credit. This indicates its tightening monetary policies have achieved their intended goals."