Home>News Center>China
       
 

Bank rates raised for first time in a decade
By Xu Binlan (China Daily)
Updated: 2004-10-29 00:42

The central bank Thursday raised interest rates for the first time in nearly a decade as lingering concerns over inflation and emerging underground loans prompted a bolder move to slow economic growth and lure back money circulating outside the banking system.


Bank of China employee shows renminbi bank notes in Beijing. The central bank said that China has decided to raise its benchmark one-year lending rate to 5.58 percent from 5.31 percent with effect 29 October, the first such move in nearly a decade. [newsphoto]

After months of debate, the hike of just over a quarter of a percentage point by the People's Bank of China (PBOC) also indicates the central government has finally decided to shift from a selective to a sweeping approach in cooling economic growth, which stood at 9.1 per cent during the first three quarters.

"This interest rate rise... is to make bigger use of economic measures in resource allocation and macro-adjustment," the PBOC said in a statement while announcing the raising of benchmark rates on one-year yuan loans to 5.58 per cent from 5.31 per cent and the rate on one-year deposits to 2.25 per cent from 1.98 per cent.

Before jacking up interest rates, measures used included administrative measures such as banning new investments in certain sectors and imposing tougher rules for converting farmland for industrial use, as well as repeated increases of commercial banks' required reserves.

There have been calls for an interest rate hike from the beginning of the current round of macroeconomic adjustment -- launched in the spring -- but the central government was cautious in this regard fearing that higher funding costs would hurt the sectors that were not overheating.

The initial cooling-down measures did suppress run-away investment growth.

But after a few months, officials and economists found that investment growth remained high and many investors responsible for the undesired growth in sectors such as real estate were obtaining loans from creditors that shun banks because of low interest rates.

Tao Dong, chief China analyst with investment bank Credit Suisse First Boston, estimated that around 120 billion yuan (US$14 billion) is flowing in the non-official system, which is equivalent to 10 per cent of gross domestic product and 0.5 per cent of credit in the banking system.

This is already alarming enough, Tao said.

If this situation deteriorates, it will lead to great financial risks and will be debilitating for banks and the authorities' capabilities in making further adjustments, Tao said.


The central bank said that China has decided to raise its benchmark one-year lending rate to 5.58 percent from 5.31 percent with effect 29 October, the first such move in nearly a decade. [newsphoto]

On the other hand, the consumer price index (CPI), the key indicator for inflation, has been well above 5 per cent. Prices for some materials were reversing the trend and picking up again. Economists believe major prices such as those of oil and grain will also stay at high levels for the rest of the year.

Although the accuracy of the CPI is questioned by some observers, it is agreed its changes could reflect the trend and its sharp upward curve this year means the real interest rate is very close to zero which could spur unhealthy investments.

The last time the PBOC raised lending rates was in July 1995, and rates were last changed in February 2002, when they were lowered to boost a sluggish economy.

In raising interest rates this time, the central bank also gives commercial banks more freedom in setting their own interest rates, a significant move in liberalizing the rates.

The upper limit on the renminbi's lending rates has been scrapped. Banks "in principle" could now charge as much as they want for yuan loans.

Previously, banks could charge no more than 70 per cent over the benchmark rate set by the central bank.

In addition, the banks can now offer a deposit rate lower than the benchmark, a practice that was not allowed before.

The rise was immediately felt across the world, driving price changes in securities, commodity and currency markets amid discussions over the effect of a slowed Chinese economy on the international market.



 
  Today's Top News     Top China News
 

Bad news dogs Bush as election draws near

 

   
 

Bank rates raised for first time in a decade

 

   
 

Beijing Olympic venues on schedule, IOC told

 

   
 

Traffic law shores up road safety

 

   
 

China takes firm stance on arable land

 

   
 

More job vacancies reported in third quarter

 

   
  China raises pension for enterprise retirees
   
  Traffic law shores up road safety
   
  More job vacancies reported in third quarter
   
  Government to upgrade farmer's skills
   
  Fatal plague in Qinghai brought under control
   
  Nation vows to punish snakeheads
   
 
  Go to Another Section  
 
 
  Story Tools  
   
  Related Stories  
   
Chinese central bank raises interest rate
   
Rate hike could harm real estate?
   
Immediate interest rate rise unlikely
  News Talk  
  It is time to prepare for Beijing - 2008  
Advertisement
         
主站蜘蛛池模板: 久久久久亚洲AV成人无码网站| 伊人色在线视频| 四虎在线成人免费网站| 在线播放国产不卡免费视频| 一级片黄色免费| 日产乱码卡一卡2卡3视频| 五月天婷婷伊人| 欧美性色欧美A在线图片| 伊人电影综合网| 纸画皮电影免费观看| 国产中文字幕第一页| 91精品欧美产品免费观看| 国产精品久久久久9999高清| 91精品啪在线观看国产18| 天天天天夜夜夜夜爱爱爱爱| 一级看片免费视频| 新梅瓶1一5集在线观看| 久久亚洲私人国产精品| 日韩视频免费在线观看| 亚洲av无码日韩av无码网站冲| 欧美大尺度xxxxx视频| 亚洲欧洲国产视频| 毛片在线播放网址| 亚洲色成人网一二三区| 第一次处破女18分钟高清| 四虎在线最新永久免费| 色多多成视频人在线观看| 国产亚洲成av人片在线观黄桃| 香蕉视频在线观看免费| 国产成人涩涩涩视频在线观看| 天天影视色香欲性综合网网站| 国产精品成熟老女人视频| 91在线视频一区| 国产麻豆媒一区一区二区三区| 98精品国产综合久久| 在线综合 亚洲 欧美中文字幕| 9一14yosexyhd| 在线中文字幕一区| 99久久久精品免费观看国产| 在线日韩理论午夜中文电影| 99久久精品这里只有精品|