The People's Bank of China (PBoC) on Friday said that it would keep monetary policy neutral to help maintain stable liquidity conditions in the year ahead. In a statement summarizing the fourth quarter monetary policy committee meeting, the PBoC said that it will keep liquidity basically stable by flexibly using various policy tools.

While reaffirming a long-standing commitment to prudent policy, the central bank said it will pay more attention to maintaining a "neutral" stance and ensure that it is "neither too tight nor too loose" to keep the economy on a path of stable growth.

China's economic and financial operations are generally stable, but the complexity of the situation cannot be underestimated, the central bank said. The yuan, which has reached an 8-1/2 year low, was on course to shed nearly 7 percent against the dollar in 2016, on track for its biggest annual fall since 1994.