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China retains interest rates
(eastday.com)
Updated: 2004-04-18 08:41
China still has no immediate plans of an interest rate hike to cool down its
largely investment-driven economic growth, said the country's chief monetary
regulator on April 16.
"Though the consumer price index in China has grown rapidly since last
September and the lending growth has expanded quickly, the most important thing
for us now is to keep a stable monetary policy," said Zhou Xiaochuan, governor
of the People's Bank of China (PBOC ), at a banking conference in Shanghai yesterday.
"It is too early to tell whether we need to adjust our interest rate," Zhou
said.
The benchmark one-year lending rate stands at 5.31 percent and the interest
rate of one-year deposits is 1.98 percent.
China reported that its economy grew by 9.7 percent in the first quarter, a
quicker pace than the expected 9 percent.
"The fast economic growth was fueled by excessive investment and we are
facing some inflation pressures," said Li Yong, vice minister of the Chinese
Ministry of Finance, yesterday.
"Our first priority now is to further exploit domestic demand and revitalize
old industrial bases," Li said.
The first three months of this year saw fixed-asset investment surge by 43
percent on China's mainland, according to the National Bureau of Statistics.
Instead of increasing interest rate, the central bank has taken other
measures to cool the economic growth, including issuing central bank bills and
raising deposit reserve requirement for lenders.
"These measures are very logical and we expect China's economy to continue to
grow at a sustainable speed in the following years," said Stephan Newhouse,
president of Morgan Stanley.
Meanwhile, Huang Ju, vice premier of China, said yesterday the country will
give full support to the reforms of big-four state-owned commercial banks, which
will be transformed into modern financial firms with sufficient capital, strict
internal management and sound profitability.
Senior government officials said that its ongoing banking reform is "one
battle that cannot lose." China is facing challenges to bail out its debt-ridden
state-owned commercial banks.
Bank of China and China Construction Bank said yesterday that their
restructuring programs are proceeding on track.
"We are currently in negotiations with some well-known international
financial institutions on potential equity investment and to choose a right
partner is difficult," Zhu Xinqiang, executive assistant president of the BOC,
said.
The country's largest foreign exchange lender has sent invitation letters to
many European and American banking and insurance institutions and large
state-owned enterprises to seek strategic investors.
The BOC plans to bring its nonperforming loan ratio below 5 percent in three
years, compared with some 14.84 percent at the end of last month.
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