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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (4169)	1/13/2005 7:22:49 PM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

China's Money Supply Grows 14.6%, Within Target (Update1) Jan. 13 (Bloomberg) -- China's money supply growth in December stayed within the government's target for a seventh straight month after banks were told to limit lending to industries including steel, autos and real estate. M2, which includes cash and all deposits, expanded 14.6 percent from a year earlier to 25.3 trillion yuan ($3.06 trillion), after growing 14 percent in November, the Beijing-based People's Bank of China said on its Web site. Foreign exchange reserves rose 51 percent from a year earlier to $609.9 billion, the bank said. The central bank on Jan. 5 cut its target for money supply growth to 15 percent from 17 percent, signaling the government won't relax restrictions aimed at slowing fixed-asset investment and curbing inflation in the world's fastest-expanding major economy. ``All the policies and measures will be kept in place,'' said Xia Bin, director of the Institute for Finance and Banking at the Development Research Center and a former central banker, said on Jan 6. ``The central bank expects inflationary pressure to feed through the system further.'' Premier Wen Jiabao has relied on credit restrictions to stem excessive investment that has clogged China's transport network, caused power shortages and fueled inflation. Central bank Governor Zhou Xiaochuan said on Jan. 5 that M2 growth in the year to December was about 14.5 percent. M1, which includes currency in circulation and demand deposits, stood at 9.6 trillion yuan at the end of December, a 13.6 percent increase from a year earlier. Outstanding loans in yuan and foreign currency rose 14.4 percent to 18.9 trillion yuan. ``Excessive credit growth has been controlled,'' the bank said in today's statement. Bank Lending Growth in bank lending fell last year as the government imposed limits on land sales and the central bank told commercial banks to reduce lending to some industries. New lending dropped to 2.22 trillion yuan in 2004, compared with a target of 2.6 trillion yuan. Industrial & Commercial Bank of China, the nation's biggest lender, said on Jan. 6 its new lending last year rose by 9 percent to 288.9 billion yuan, down from 13 percent growth in 2003. The growth rate of household savings fell every month in the first three quarters of last year as inflation prompted individuals to move money from low-yielding bank deposits into real estate, mutual funds and other investments. Rate Increase The People's Bank of China raised its one-year lending and deposit rates by 0.27 percentage point to 5.58 percent and 2.25 percent respectively as of Oct. 29. The move was aimed at cooling bank-fuelled fixed-asset investment and narrowing the difference between deposit rates and inflation, which stood at a seven-year high of 5.3 percent in September. In his speech on Jan 6, central bank Governor Zhou said the bank will support working capital loans for companies creating jobs and encourage lending to agriculture and small and medium-sized firms, while also controlling medium- and long-term loans. China is targeting growth of at least 7 percent a year to create tens of millions of jobs for graduates, surplus farm workers and fired state workers. The economy grew 9.1 percent in the third quarter from a year earlier. bloomberg.com