BEIJING, Nov. 8 (Xinhua) -- The People's Bank of
China (PBOC) announced Thursday it might use a variety of measures, including
bank and treasury bond issues and reserve requirement ratios, to control the
country's "severe" liquidity problem.
A PBOC report gave no details about the extent of the measures or when or how they would be implemented, but it stressed that absorbing liquidity in banks and strengthening credit control could not fundamentally tackle the constant and rapid accumulation of liquidity and other structural problems.
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China's economic growth is expected to exceed 11 percent for 2007 and growth in the consumer price index (CPI), the main measure for inflation, will be around 4.5 percent year-on-year, the central bank said Thursday.(Xinhua File Photo)
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"These measures can only create a steady monetary and
financial environment for China's economic growth and win time for restructuring
and reform," said the central bank's Third Quarter Report of the Implementation
of the Monetary Policies.
Excessive growth in investment, the trade surplus and
credit remained the prominent problems of the Chinese economy.
"China still faces severe situations on liquidity....
The role of price levers will be strengthened while the use of interest rates
and exchange rates policies will be more coordinated so as to stabilize
inflation anticipation," it said.
The report identified the immediate reason for excess
domestic liquidity as the continuous surplus of international payments, but also
pointed to deep-seated structural problems, such as the high saving ratio
accompanied by low consumption.
The report revealed that bank savings are shifting
from time accounts to current accounts, although the saving inclination among
local residents picked up slightly after interest rate hikes, interest tax cuts
and rising risks on the capital market.
PBOC figures show the decline in aggregate deposits
on individual accounts slowed in the third quarter, with the drop being 213
billion yuan (about 28.55 billion U.S. dollars) less than the decrement in the
second quarter.
At the end of September this year, the balance of
deposits in Renminbi rose 6.9 percent over that of 2006 to 17.2 trillion yuan
(2.3 trillion U.S. dollars). The growth was 9.2 percentage points lower than the
comparable previous figure.
The total balance of deposits in Renminbi and other
currencies by all financial institutions amounted to 39.5 trillion yuan
(5.29trillion U.S. dollars) at the end of September, up 16 percent over the same
time of 2006. The rise was 0.4 of a percentage point lower than the comparable
growth rate between September 2006 and September 2005.
The report said the central bank would strictly
monitor short-term capital inflow, tighten exchange settlement management and
make efforts to satisfy the demand of domestic institutions for foreign
currencies by expanding overseas investment channels and encouraging companies
and individuals to carry out industrial and financial investment abroad.
Investment, a more powerful engine than consumption
of China's economy, which was expected to register a double-digit growth for the
fifth year, will continue to grow rapidly boosted by strong investment sentiment
and sufficient capital supply.
PBOC figures show approximately 170,000 new projects
have been started in the first nine months of this year, up 18,000 from the same
period of last year, involving an aggregate planned investment of six trillion
yuan, up 24.2 percent over the same period of last year.
Although per capita cash income for rural households
and per capita disposal income for urban homes have both grown faster than the
GDP, the report said consumer price hikes may dampen the consumption growth to
some extent.
Inflation risks deserve continuous attention as the
upward movement in prices for grain crops and energy products as well as labor
costs was expected to raise the possibilities of price hikes on the whole.
Boosted by its rocketing trade surplus, which hit
185.7 billion U.S. dollars by the end of September, exceeding the total trade
surplus of 177.47 billion U.S. dollars for 2006, China had registered 1.43
trillion U.S. dollars in foreign exchange reserve by September, up 45.1 percent
year-on-year, the highest in the world.
The country's consumer price index, a key measure for
inflation, hit a 11-year high of 6.5 percent in August.
This year the central bank has raised the reserve
requirement ratio by four percentage points accumulatively, cut interest income
tax from 20 percent to five percent, and lifted interest rates five times.
Year-on-year inflation likely to be 4.5%
BEIJING, Nov. 9 -- China's economic growth is expected to exceed 11 percent for 2007 and growth in the consumer price index (CPI), the main measure for inflation, will be around 4.5 percent year-on-year, the central bank said Thursday.
China's trade surpluses will remain large but their growth rate will gradually ease, the People's Bank of China said in its third-quarter monetary policy report. Full story
Senior official warns economic
overheating due to excess liquidity
BEIJING, Nov. 7 (Xinhua) -- Chinese economy would overheat
if the issue of excess liquidity could not be solved substantially, a senior
Chinese official said on Wednesday.
Speaking on the first day of the International
Finance Forum in Beijing, Cheng Siwei, vice chairman of the Standing Committee
of the National People's Congress (NPC), said the excess liquidity currently
remains a major issue in the Chinese economy, calling for effective measures to
deal with it and prevent it from causing the economy to overheat. Full story
