The latest central bank figures on money supply for the first half of this year indicate the Chinese economy is softlanding at a slow pace, economists said.

The People's Bank of China, the country's central bank, said Thursday the country's outstanding M2 -- the broad measure of money supply -- grew a year-on-year 15.7 percent by the end of June, an increase described by the bank as "stable" in its midyear report.

China has set a 15 percent target for money supply growth in 2005 to fuel its booming economy on the one hand and rein in the growth of some overheated sectors on the other.

By the end of June, the outstanding yuan-denominated loans stood at 18.6 trillion yuan (2.25 trillion US dollars) at all financial institutions, up 13.3 percent on a yearly basis, or 3.1 percentage points lower than a year ago, the central bank reported.

Chinese economists said the figures indicate the country's economy showed little sign of marked fall, but that of a softlanding at a slow pace.

Ha Jiming, chief economist of China International Capital Corp., said the figures showed a marked rebound of money supply as the growth rate of M2 stood at 15.7 percent, higher than not only the previous month but also the target set for this year.

The gain of loans, he said, was mostly concentrated in the rise of capital in circulation, which is insufficient to support the possible rebound of an increase of fixed asset investment.

Ba Shusong, deputy director-general of the Finance Institute of the Development Research Center of the State Council, said the figures indicated the central bank had fine-tuned its control on money supply to prevent possible rapid economic slowdown.

Ha said it is unlikely the central bank will relax its monetary policy as there are many uncertainties regarding inflation for the second half of this year, including that on the change of food prices due to severe summer flooding.

But the monetary policy may be relaxed if the Chinese currency appreciated in the latter half of this year to counteract its contracting effect on the domestic economy.

China began to curb excessive investment in some sectors, including iron and steel, cement and aluminium industries, since early last year to ensure the economy remains on a fast, stable and sustainable manner.

The moves used to curb the investment in overheating sectors, which caused widespread of energy shortage across the country, include tightened loan and land supply.

Many experts warned of a hardlanding of the national economy, which has been grew by an annual average of 9.4 percent since 1978, when the country began to introduce economic reform and open to the outside world.

Source: Xinhua