China likely to ease credit controls in Q4 - report
Monday, October 25, 2004 10:30:20 AM
afxpress.com
BEIJING (AFX) - China is likely to ease restrictive monetary policies and is set to pump 700-800 bln yuan of credit into the economy in the last quarter of this year, the Beijing-based China Business reported
"After China's banks' outstanding loans rebounded to 470 bln yuan in the third quarter, the credit supply in the fourth quarter may hit 700-800 bln yuan," the newspaper quoted a source close to the People's Bank of China, the country's central bank, as saying. The newspaper added that increased credit supply suggests the current round of macro-economic control measures introduced by the government since late last year may have taken full effect. China late last year introduced stringent monetary policies aimed at cooling rapid growth across the economy, and targeting the steel, aluminum, real estate, cement, and auto-sectors in particular. But Cao Heping, deputy director of the Economics Institute of China's prominent Peking University, said that "since June of this year, government credit controls have began to ease up month by month
"By now, the money supply has recovered to normal levels compared with previous years," he said, and added that lower inflationary pressure provides the main justification for reduced credit controls. China's September consumer price index (CPI) stood at 5.2 pct, down 0.1 percentage point from August and July, according to the National Bureau of Statistics
And in June, monthly credit supply dropped to 30 bln yuan, well below normal levels. "The drastic credit slide in June is not what we were hoping for," the China Business quoted another source with the central bank as saying. "Macro-economic controls don't mean money supply is cut off, but just that the central bank wants a credit increase appropriate to the economic operation." (1 usd = 8.3 yuan) jianlin.li@xinhuafinance.com ljl/bm/wk For more information and to contact AFX: www.afxnews.com and www.afxpress.com
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