China's money-supply growth exceeded the central bank's annual
target for a 10th straight month as ballooning trade surplus pumped
cash into the world's fastest-growing major economy.
M2, the broadest measure of money supply, rose 18.5 percent to
40 trillion yuan (US$5.4 trillion) in November from a year earlier,
the People's Bank of China said yesterday on its website. The pace
was the same as in October and more than the 18.2-percent median
estimate of 19 economists surveyed by Bloomberg News.
China has pushed interest rates to a nine-year high and is
restricting bank lending to try to curb decade-high inflation and
prevent the economy from overheating. The government said last week
that it was switching to a "tight" monetary policy and last
Saturday ordered banks to boost reserves by one percentage point,
the biggest increase in four years.
"Money-supply growth has stubbornly stayed at a very high level
that the authorities are uncomfortable with," said Dariusz
Kowalczyk, chief investment strategist at CFC Seymour Ltd in Hong
Kong. "The central bank will continue to raise interest rates and
reserve requirements."
The trade surplus rose to a monthly record of US$27 billion in
October. The central bank's target for money-supply growth this
year was 16 percent.
The central bank has raised interest rates five times this year.
The key one-year lending rate is 7.29 percent, the highest since
1998. Banks are required to set aside 14.5 percent of deposits as
reserves from December 25.
Regulators have also urged reduced lending for the rest of this
year. Seven banks, including the Agricultural Bank of China, are
banned from making new loans, the official Shanghai Securities
News reported last month.
The China Banking Regulatory Commission will seek to cap
commercial lenders' loan growth at 13 percent in 2008, down from
the 15-percent target this year, the China Business Journal
reported on December 3.
(Shanghai Daily December 11, 2007)
