China cen­tral bank vows lend­ing con­trol to tame in­fla­tion

The Pak Banker - - I Nternational -

BEI­JING: China's cen­tral bank took aim at in­fla­tion once again on Mon­day by say­ing it will con­trol lend­ing and money growth in the world's sec­ond­biggest econ­omy to head off price pres­sures and as­set bub­bles. In a state­ment on the cen­tral bank's web­site (www.pbc.gov.cn), Hu Xiao­lian, a deputy gover­nor, said China had been nor­mal­iz­ing pol­icy and will ex­plore new ways to man­age ex­cess cash, which is seen as a ma­jor driver be­hind 28-month high in­fla­tion.

Her re­marks re­in­forced state­ments from China's top lead­ers that the task of tam­ing in­fla­tion will be a pri­or­ity for Bei­jing next year.

"An im­ple­men­ta­tion of pru­dent mon­e­tary pol­icy is help­ful in strength­en­ing the man­age­ment of in­fla­tion­ary ex­pec­ta­tions and in fend­ing off as­set bub­bles," Hu said.

On Satur­day-Christ­mas Day-the cen­tral bank sur­prised in­vestors with a 25-ba­sis-point rate rise in bench­mark de­posit and lend­ing rates, its sec­ond in­crease in just over two months. Hu re­it­er­ated the cen­tral bank's de­ter­mi­na­tion to drain ex­cess cash from the fi­nan­cial sys­tem by us­ing all tools at its dis­posal: in­ter­est rates, re­serve re­quire­ment ra­tios, open mar­ket op­er­a­tions and more.

"We will ex­plore new tools ... to keep a good con­trol on the gate of liq­uid­ity," she said, but did not in­di­cate what these might be. A steady stream of anti-in­fla­tion talk from the Chi­nese cen­tral bank has led many in­vestors to bet on more rate in­creases in 2011.

A Reuters poll showed in­vestors see the bench­mark one-year de­posit rate ris­ing to 3.25 per­cent by the end of next year, from 2.75 per­cent now.

In a sep­a­rate state­ment, the mon­e­tary pol­icy com­mit­tee within the cen­tral bank noted China's eco­nomic re­silience, but with a touch of cau­tion. -Ap

HAI PHONG: A ship un­der re­pair at Vi­nashin's Nam Trieu ship­build­ing fac­tory in Hai Phong city. Vi­nashin is be­ing re­struc­tured and of­fi­cial me­dia last week quoted the com­pany's chair­man, Nguyen Ngoc Su, as say­ing the process will leave 13,000 work­ers re­dun­dant. -Afp

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