The decision was made at a regular meeting of the central bank's Monetary Policy Committee this month, the newspaper said.

The policy makers agreed that "monetary policy can continue to play a role in maintaining economic growth under current situation" in the second quarter, it said.

"To prevent defaltion, monetary supply must still be appropriately increased to boost economic growth," the newspaper said.

China's broad M2 Money supply was up 17.8 per cent year onyear at the end of March to 10.8438 trillion yuan ($1.3 trillion), official data showed.

Premier Zhu Rongji has said China's economy grew 8.3 per cent in the first quarter of this year. The figure was expected to be confirmed by the State Statistical Bureau at a news conference on Tuesday.

Analysts say first quarter growth was fuelled by massivegovernment spending on public works, while private consumption remained low as the benchmark Retail Price Inflation index has been in the negative territory since October 1997.

The Financial News said the central bankers also urged financial institutions to improve services and support the agricultural sector, infrastructure construction, exports, credit consumption and the building of small towns.