China's fixed asset investment is still under potential pressure of further
expansion despite controls imposed this year, says a senior official with
China's central bank.
PBOC increases reserve ratioSu Ning, deputy governor of the People's Bank of
China (PBOC), told the 10th Annual CEO Forum sponsored by Business Week that the
pressure of further expansion came from the strong investment incentives of
local governments and the reinvestment of company profits.
Su said China's macro economy was operating with slight fluctuations and
predicted it would develop rapidly and steadily in a long term.
The central bank would continue to carry out stable and healthy monetary
policies to put the growth of loans within a reasonable level and to enhance the
adjustment of loan structure, he said.
PBOC figures show China saw a slower growth in loans in September. However,
long-term loans increased by 708.6 billion yuan (US$88.575 billion) from May to
The central bank raised the one-year and one-to-three-year loan rate by 0.27
percentage points on August 17. The three-to-five-year loan rate was raised by
0.36 percentage points and the rate for five years by 0.45 percentage points.
Raising the rate for long-term loans by a larger margin than that of
short-term loans would help to curb demand for long-term loans and the expansion
of fixed assets investment, central bank officials have said.
Measures to tighten controls on the financial and monetary sector had already
been taken and the effects would be felt later, said Su.
He emphasized that the enlargement of domestic demand was one of the
fundamental ways to solve the economic imbalance.