China's economy is expected to generally rebound in 2023 and monetary policy will be precise and forceful, the central bank said in its quarterly policy implementation report released Friday.

The People's Bank of China (PBOC) said it will focus on supporting domestic demand expansion and stabilizing economic growth and prices while avoiding "flood-like" stimulus, according to the report.

However, it said that the external environment remains "severe and complex," adding the basics of domestic economic recovery are "not solid." The report also said that the property sector requires time to transition while the pressure of balancing local government fiscal revenue and expenditure persists.

China will closely watch the trend and changes in inflation and keep the prices of energy and food stable, said the report.

The world's second-largest economy is stabilizing and improving but still faces many challenges, Premier Li Keqiang said at a cabinet meeting on Wednesday, after the country's economic growth slowed to one of the worst levels in half a decade due to stringent COVID-19 lockdowns and curbs in 2022.

The PBOC will keep liquidity reasonably ample and maintain effective credit growth, according to the report.

The central bank also pledged to start improving social expectations and boosting confidence, mainly focusing on stabilizing economic growth, employment and prices.

As the problematic property sector has showed a tentative recovery, the PBOC said it will satisfy reasonable financing demand in the sector but insist on not using real estate as a short-term means to stimulate the economy.

Late on Friday, the PBOC and banking and insurance regulator issued a notice to encourage commercial banks to issue loans for the purchase of housing by rental housing groups.