BEIJING - Macro-economic
control in China is now at the crucial stage and there
are greater difficulties for operation of monetary
policies, said Zhou Xiaochuan, governor of the Peoples
Bank of China, the central bank,
Macro control
over the past months has yielded initial positive
effects, but overheating of investment may rebound again
if the control is loosened, Zhou said recently in
Tianjin.
According to the central bank governor,
the scale of construction in progress in the country is
still large and various localities still have strong
investment zeal, implying investment growth may bounce
back again.
Meanwhile, though the growth rates
of broad money (M2), narrow money (M1) and new loans
have already fallen within a rational level, the
positions for foreign exchange purchases are still
growing at a rapid speed, the base money supply is still
excessive and structural contradictions in money and
credit supply are still acute. All these have brought
greater difficulties to operation of monetary policies,
the central bank governor pointed out.
According
to financial statistics released by the Peoples Bank of
China, the annual growth rate of broad money (M2) fell
to 15.3% by the end of July, down 5.4 percentage points
from a year earlier and down 0.9 percentage points from
the end of June. After seasonal factors, the
month-on-month growth rate in July is annualized only at
6.5%. The balance of M2 stood at 23.8 trillion yuan at
the end of July.
Meanwhile, the balance of
narrow money (M1) stood at 8.8 trillion yuan at the end
of July, up 15% on an annual basis. The growth rate was
five percentage points lower than a year earlier and
also 1.2 percentage points lower than a month earlier.
The outstanding of cash in circulation, also
called M0, was 1.9 trillion yuan at the end of July. The
net cash supply in July amounted to 39.2 billion yuan,
1.4 billion yuan less than the figure for the same
period of last year.
In China, M1 means currency
in circulation and demand deposits, and M2 means M1 plus
quasi-money, ie time deposits, savings deposits and
other deposits. China's central bank has set a control
target of about 17% for M2 and M1 growth this year. The
growth rate of both M2 and M1 already fell within the
control target by June.
Meanwhile, the
outstanding local and foreign currency loans of all
financial institutions in the country, including foreign
banks, were 18.1 trillion yuan by the end of July, up
15.9% over a year before. The growth rate was 7.3
percentage lower than a year earlier and also 0.8
percentage points lower than a month earlier.
Of
the total, Renminbi loans accounted for 16.99 trillion
yuan, up 15.5% over a year before, with the growth rate
down 0.8 percentage point from a month earlier, and down
7.9 percentage points from a year earlier. After
seasonal factors, the month on month growth rate is
annualized at 8.2%, up 0.4 percentage point from a month
earlier. In comparable terms, medium and long-term loans
increased 29% in July, 1.7 percentage points lower than
a month earlier.
July is usually a slack season
of lending in a year. The RMB loans in July decreased
1.9 billion yuan from the previous month. But in
consideration of write-offs of non-performing loans in
July, there was actually an increase of 26.5 billion
yuan, which was 79.3 billion yuan less than the increase
in the same period of last year.
(Asia
Pulse/XIC)
Sep 4, 2004
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