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China can't rely solely on central bank interest rate and exchange rate policies to maintain financial stability, it also needs appropriate macroeconomic policies and a healthy microeconomy, the central bank head said in an article he wrote for the China Economic Weekly.

"We shouldn't believe that financial markets will be able to remain stable just with the central bank setting suitable interest rate and exchange rate policy," Zhou Xiaochuan, governor of the People's Bank of China, said in the magazine, which is backed by the People's Daily newspaper.

The article was reprinted on the Xinhua News Agency Web site.

"If we don't resolve historical problems (in China's banking sector) and make the microeconomic fundamentals of financial institutions sound, then I fear it will be impossible to keep the macroeconomy stable," Zhou said.

He said that in the future, government investment will decrease and move more toward funding rural development projects and increasing public services.

The article didn't mention changes in interest rate or exchange rate policy.

The Caijing magazine published last week an interview with Zhou, in which he said China's expanding trade surplus was causing problems for China's exchange rate policy. In the interview, he said increasing domestic demand could help reduce China's trade surplus.

Officials at the central bank's news department couldn't be reached to confirm the accuracy of the Xinhua report.