China's central bank governor warns of risks in over-fast credit growth
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Date-Time: 2003-7-28 14:09:08 BEIJING (XFN) - China's central bank governor Zhou Xiaochuan said the country's credit is growing at such a rapid pace that it could lead to possible new bad assets, indicating that China may tighten money supply to head off inflation and bad loan risks. The People's Bank of China, the central bank, said the total outstanding loans extended by financial institutions in China at the end of June rose 22.9 pct year-on-year to 15.9 trln yuan, marking the highest growth rate since 1997. China's M2 money supply rose 20.82 pct to 20.5 trln yuan in the first half of 2003, 6.1 percentage points higher than the growth rate of last year. The PBoC chief said the central bank must adopt early steps to prevent inflation rather than take a wait-and-see stance, as it could take six months or more for the effects of money supply to show up in prices. Zhou also said China will keep the Chinese yuan stable and take preventive measures in case of inflation, marking the latest official comment that China will not devalue the yuan in the short term, despite of such appeals abroad. An unstable currency value and inflation "will seriously damage the interests of the masses", Zhou said. xin.zhou@xfn.com
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