| | |
| | | News Analysis - China apt to continue prudent monetary policy to curb excessive growth of bank credit
2003-08-15
Xinhua
Chinese banking experts
predicted that the People's Bank of China (PBC), China's central bank, would
adopt series of policies to curb the recent excessive growth of monetary
credit.
But such policies, interpreted as policy tools to "cool down" the
overheated granting of bank credit, would remain prudent and not hamper the
rapid and stable growth of China's economy, said Wang Songqi, a noted financial
analyst of the Financial Research Center of the Chinese Academy of Social
Science (CASS).
According to the latest official statistics, the
outstanding loans reached 16 trillion yuan (about 1.93 trillion US dollars) by
the end of July, and up 23.2 percent year-on-year, the highest growth since
August 1996.
A robust growth momentum of China's national economy and a
strong growth of investment in fixed assets could trigger such a growth, Wang
explained.
In its quarterly implementation report on the monetary policy
issued last Tuesday, the PBC also offered two reasons why local commercial banks
are encouraging more enterprises to take out of
commercial loans.
Some commercial banks intended to issue more new
loans to handle their non-performing loans (NPL), the PBC noted.
The
central bank warned that the continued excessive growth of monetary credit loans
might help generate new NPLs and trigger financial crisis due to the
underdeveloped risk management system of China's commercial banks.
The
central bank is unlikely to adopt drastic monetary policies to decrease credit,
although the bank has given a clear warning about the situation in the
implementation report, Wang predicted.
An abrupt reduction of commercial
loans would be like "cutting down the blood supply" of those Chinese
enterprises, Wang said, citing the fact that about 90 percent of Chinese
enterprises' business financing came from the monetary credit from commercial
banks.
Furthermore, the current prudent monetary policy is vital for the
rapid and healthy development of China's economy, Wang added.
In the
implementation report, the central bank also said that it would keep a close eye
on the latest developments of the financial business at home and abroad and
improve the monitoring procedures on banking credit.
To continue issuing
central bank bills is a logical option to maintain the growth momentum of the
national economy and meanwhile to curb the excessive growth of monetary credit,
the PBC said in the report.
 | | | | |
|
