Wu Xiaoling, vice president of the People's Bank of China
(PBOC), has called for joint efforts by banks, enterprises and
local governments to assist the central bank in implementing its
macro-control measures to curb investment overheat.
She warned that all sides have to restrain themselves from
intensifying the contradictions to echo these good-hearted and
moderate measures, unless the central bank may adopt even harder
measures.
The official explained the central bank's decision to increase
reservation funds of commercial banks, when she was speaking at the
current Boao Forum for Asia 2004 Annual Conference Sunday.
Over the past eight months, the central bank has increased the
reservation funds of commercial banks three times, from the
previous 6 percent to the current 7.5 percent.
Some local experts said if the central bank measures do not
work, it has to take stronger actions including the increase of
interests of bank loans, resulting in more powerful impacts on
enterprises and the whole economy.
The central bank increased the reservation funds for the first
time in the fourth quarter of 2003, forcing the amount of bank
loans to decrease to 97.9 billion yuan (about US$11.8 billion),
from 230 billion yuan (about US$27.7 billion) in the third quarter
of last year.
However, investment in steel industry went up by 172.6 percent
in the first two months of this year, while investment in cement
industry increased by 133 percent in the same period.
In his opening speech of the forum Sunday, Chinese President Hu
Jintao also confirmed the existing of overheat in investment and
bank loans, and he said it may bring about negative impacts on
China's economy if the problem is not be resolved timely and
adequately.
But the president believed that China is sure to maintain a good
trend of economic development, by strengthening and improving
macro-economic-control and bringing market mechanism into full
play.
(Xinhua News Agency April 26, 2004)