Learn Chinese - Zhou: No monetary restraints in near future

BIZCHINA / From Top Officials

Zhou: No monetary restraints in near future

(Chinadaily.com.cn)
Updated: 2007-05-25 14:48

People's Bank of China governor Zhou Xiaochuan said yesterday that the
government will not exercise any monetary restraints in the near future.

Related readings:
Wu: Large yuan appreciation would hurt China
Wu: China to promote FX reform at own pace
Overseas banks can issue renminbi cards
Zhou: China to increase yuan flexibility

"The government needs time to observe the feedback of recent policies
before taking further measures to cool down the economy," Zhou told
reporters after meeting with the United States' senators during the
U.S.-China Strategic Economic Dialogue in Washington.

Last Friday, the central bank raised the benchmark one-year interest rate
by 0.27 percentage points to 3.06 percent, and one-year lending rate by
0.18 percentage points to 6.57 percent. It also ordered commercial banks
to set side 11.5 percent, of their deposits as reserves, up from 11
percent.

That marked the first simultaneous use of two monetary tools in a decade,
as well as the eighth increase in reserve ratio since last July and
fourth interest rate hike since last April.

Also on Friday, the reminbi's daily trading limit against the US dollar
was widened to 0.5 percent from 0.3 percent.

Undaunted by the latest tightening measures, Chinese stocks has rebounded
this week, though with strong daily up-and-downs.

Xiang Huaicheng, Chairman of the National Council for Social Security
Fund, admitted that the Chinese mainland's stock market has turned
somewhat overheated recently.

"The bubbles exist", he said. "But the stock market is just like beer, it
is good to have some bubbles unless there are too many." However, he
pointed out that investors should be fully aware of the risksin the
market.

(For more biz stories, please visit Industry Updates)

Learn Chinese