China's top banker sees rate rises: Xinhua

Updated: 2010-12-23 15:27


Twitter Facebook Myspace Yahoo! Linkedin Mixx

SHANGHAI/BEIJING- China Construction Bank Corp (CCB) Chairman Guo Shuqing said he expects the government to raise interest rates and lift bank required reserve ratios (RRR) further next year.

Related readings:
China's top banker sees rate rises: XinhuaChina to boost interest-rate liberalization 
China's top banker sees rate rises: XinhuaPBOC vows interest rate prudency 
China's top banker sees rate rises: XinhuaGold drops on China interest rate hike rumor, stronger dollar 
China's top banker sees rate rises: XinhuaJump in Oct CPI may cause another interest rate hike 

Guo, former head of the State Administration of Foreign Exchange (SAFE), told Xinhua News Agency that the moves were aimed at reining in money supply and bank credit.

Guo said the economy was expected to grow between 8 and 9 percent next year, while loan growth would likely slow to 13-14 percent.

Many analysts expect China's economy, the world's second-biggest, to grow 10 percent this year. Outstanding loan growth, which has been slowing steadily this year as the government tightens bank credit, stood at 20 percent in November.

But even with higher reserve requirements and rate rises, Guo said monetary policy was only normalising from a loose stance, and had yet to be considered tight.

Beijing earlier this month switched to a "prudent" monetary policy from its "moderately loose" stance as it stepped up its fight against inflation.

"(Monetary policy) is returning to normal and the prudent stance should not simply be interpreted as 'tightening'," Guo was quoted as saying.

Guo said he expected inflation to eventually stabilise after a slew of tightening.

He said China Construction Bank would help tighten bank credit by lending less to sectors suffering from overcapacity or that had been singled out by the government for fewer loans.

The People's Bank of China has so far raised the deposit reserve ratio for banks six times this year and the benchmark interest rates once. It wants to steer credit growth back to normal after a surge in 2009 following the global financial crisis.

Separately, Xia Bin, an academic advisor to the central bank, said China would not be able to sustain double-digit growth in 2011, but many local governments were still prioritising economic growth ahead of everything else.

About half of the country's 32 provinces had submitted plans to Beijing saying they wanted economic growth in their regions to stay above 10 percent in 2011, Xia was quoted by Internet portal as saying.


Ear We Go

China and the world set to embrace the merciful, peaceful year of rabbit

Preview of the coming issue
Carrefour finds the going tough in China
Maid to Order

European Edition


Mysteries written in blood

Historical records and Caucasian features of locals suggest link with Roman Empire.

Winning Charm

Coastal Yantai banks on little things that matter to grow

New rules to hit property market

The State Council launched a new round of measures to rein in property prices.

Top 10 of 2010
China Daily in Europe
The Confucius connection