China will give priority to boosting domestic demand over increasing the exchange-rate flexibility to deal with the imbalances of international payments, central bank governor Zhou Xiaochuan said today.

"The most effective means to reduce the imbalances is to use polices to adjust the economic structure," Zhou said at a press conference in Beijing during the on-going annual meeting of the National People's Congress.

"First and foremost, policies will be set to shore up domestic demand, especially to bolster domestic consumption and develop the services sector," Zhou said.

Other policies that help adjust the economic structure will include spurring imports and encouraging Chinese enterprises to set up factories abroad, Zhou said.

"These measures might take longer to bear fruit, but they are very important and should be given priority," Zhou said.

As a "complementary" policy, the exchange-rate policy can play a role in helping adjust the balance between imports and exports, according to Zhou.

In addition, the country can change the management of foreign reserves to provide convenience to enterprises that hope to invest abroad, Zhou said.

The trade imbalances will "still take time to adjust and gradually resolve," Zhou added.