China is shifting from cutting debt to boosting growth. The government's work report outlined the change in fiscal policies this year and the central bank's role in that process. Xia Cheng reports from an NPC sideline conference by the People's Bank of China.

China wants a stable money supply for the economy on fiscal steroids.

It aims to prevent cash squeeze in the market when business activity rises.

YI GANG PBOC GOVERNOR "The downward trend of social financing has been tamed. Now, given China's current economic situation, there's still room for reserve requirement ratio cut. But the room is much smaller than in previous years. Overall, the prudent monetary policy tone hasn't changed. We will take a market-oriented approach when it comes to managing interest rates, and use supply-side reform to reduce the risks of lending among smaller companies, to drag down to overall cost of financing in China."

XIA CHENG BEIJING "The central bank has mainly been managing the expectations.

It has been telling the market that it cares about jobs and inflation, but not so much about economic stimulus."

That gives fiscal policy more room to perform as tax cuts and government spending have a more direct impact on the economy.

And there will unlikely be a flood of monetary easing like a decade ago.

The central bank has dropped the neutrality of policy to pursue a prudent approach.

That leads China to pursue longer maturities of debt and long-term bank lending.

But if the economy grows slower than expected in the next few quarters, there will be temporary cash reliefs for the market.

China's A-shares have seen wild rallies this year, and the bond market is showing rising asset bubble risk. So when will be a good time for the central bank to take actions?

Meanwhile, the US fed has decided not to raise interest rates this year as aggressively as before. That takes off some pressure on the Chinese yuan currency.

The big uncertainty though is Europe, as the ECB lowers the 2019 and 2020 eurozone growth forecasts.

As China prioritizes financial risk control, bank lending will remain the primary source of funding and credit for the economy.

That's why analysts expect to see more banks issue perpetual bonds, or debt without maturity dates, to boost their long-term capital.

XC, CGTN, BEIJING.