Central Bank Report: China's GDP Expected to Exceed 7.5% This Year

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Last updated at: (Beijing Time) Sunday, August 04, 2002

Central Bank Report: China's GDP Expected to Exceed 7.5% This Year

The People's Bank of China released its second quarter report on monetary policy according to which China's GDP may exceed 7.5% this year.

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The People's Bank of China released its second quarter report on monetary policy according to which China's GDP may exceed 7.5% this year.

The report said that small and medium-sized enterprises are hard to get loans because first, an oversupply of products is found, secondly, enterprises' social credit is not good, thirdly, banking service for small and medium-sized enterprises is not perfect. Fourthly, commercial banks' system should be upgraded. Fifthly, banking service at county level is still very weak.

The central bank will issue a guideline for supporting small and medium-sized enterprises to get loans lately to perfect loan system.

The reports said that there are several reasons for current price reduction, first, technology upgrading factor, second, influence of China's WTO entry, third, wider income gap. Generally, it is chiefly because of overproduction and a slowdown in market demand.

The report pointed out that banking institutions hold a large amount of low-interest rate T bonds and this is regarded as risky.

The report also said that monetary policy should support development of real estates, but it should also prevent bubble in this area especially a surplus of high-grade housing.

Individual house mortgage loans should be encouraged, but the policy should prevent over-concentration of real estates loans in order to prevent financial risk.

Stable interest rate

The People's Bank of China also said it is appropriate to maintain a stable benchmark interest rate of the Chinese currency, while expanding the trial of a floating ratein rural credit cooperatives.

The report said the government should do a better job in implementing its prudent monetary policy in the second half of this year.

In the process of guarding against financial risks, efforts should be made to properly regulate money supply, vigorously optimize the loan structure, help commercial banks establish and improve the incentive mechanism on money business, and strengthen the support of the financial sector to economic development, the central bank said.

The report stresses the need to maintain a proper growth in loans through various monetary measures, including the use of the interest rate as a lever, appropriately broadening the scope of the experiment with a floating interest rate in rural credit cooperatives.

It also calls for a regulation on interbank lending among commercial banks in a bid to resolve the shortage of capital at some branches of certain commercial banks.

The report urges commercial banks to continue to provide loans to individuals for housing and car purchase, education and re-employment.

By PD Online Staff Li Yan

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