When responding to the historical low of the Chinese stock market, Yi Gang, governor of the People’s Bank of China (PBOC), said that the current stock fluctuation is not a true reflection of the Chinese economy and the growth potential is huge, and prudent and neutral monetary policy will be continued.

Yi said the recent fluctuation of the Chinese stock markets is mainly affected by investors' expectations and sentiment, according to an interview with the Financial Times that was published on PBOC's website Friday.

Here is the full transcript of his answer:

In fact, China’s current economy fundamentals are good, financial risk prevention and control has progressed, macro leverage has been stabilized, the economic endogenous growth potential is huge, and the economy continues to maintain steady growth. Overall, the current stock market valuation is at a historically low level, which is in contrast to China's sound economic fundamentals.

Some local governments have issued policies to support the liquidity of local enterprises lately, which we would actively encourage. And the PBOC is mulling over to continue to introduce targeted measures to alleviate the financing difficulties of enterprises.

First, PBOC is to promote the implementation of bond financing support plan for private enterprises, which provides credit enhancement services for private enterprises that have difficulties in issuing bonds through credit risk mitigation, thus it will promote the overall financing recovery of private enterprises.

Second, PBOC is to promote the equity financing support plan for private enterprises, which supports qualified private equity fund managers to initiate the establishment of private enterprise development support funds, and provides equity financing support for private enterprises with financial difficulties.

Third, the central bank will comprehensively use monetary policy tools such as refinancing, rediscounting, and medium-term lending to play a structural adjustment function of macro-prudential policies. And PBOC will support commercial banks to expand credit supply to private enterprises.

The PBOC will continue a prudent and neutral monetary policy, proactively do a good job of relevant policy reserves, maintain a reasonable and stable liquidity, promote healthy and stable development of the market, and create a sound economic and financial environment.