BIZCHINA / Top Biz News
China to 'fine tune' monetary policy
By Zhang Lu (China Daily)
Updated: 2006-06-16 09:08
China will adjust its monetary policy in light of data showing continued
excessive credit and investment growth, the central bank chief said
yesterday.
"There will be fine-tuning (measures) and we will strengthen open market
operations," Zhou Xiaochuan, governor of the People's Bank of China, told
reporters at a forum co-hosted by Bank of Communications and its partner
HSBC.
He did not elaborate on specific measures, however.
The central bank has already begun draining cash from the financial
system by raising lending rates and selling bills to selected banks.
Although figures show money supply, loans and investment continued to
surge in May, tightening measures adopted by the central bank have had
some effect, said Chen Jijun, an analyst with CITIC Securities.
"The growth might be higher if the government had not raised the one-year
benchmark lending rate by 27 base points," he said.
New loans in May were nearly double those of the same month a year
earlier.
"Within the next one or two months, the government may continue to
monitor the results of its previous measures and strengthen the
implementation of these measures, instead of taking further moves very
soon," Chen said.
Issuing special bills has been one of the major means of controlling the
surge in loans, vice-governor of the central bank Wu Xiaoling said on
Wednesday.
The central bank sold 100 billion yuan (US$12.5 billion) worth of
one-year bills to selected banks, with the yield at 2.1138 per cent, much
lower than the 2.4800 per cent in its regular sale of one-year bills this
week.
This measure is expected to have more impact than a similar move taken a
month ago.
(For more biz stories, please visit Industry Updates)
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