It is still too early to say that China has entered a cycle for deposite interest rate rise despite the current market pressure, an expert said this week.

The rise has to depend on a combination of various factors, not just the market demand, said Tang Xu, head of the research bureau of People's Bank of China, the country's central bank, on Friday at a symposium on balance of international payments.

Tang predicted that China's GDP growth in the first six months of this year will be higher than the 10.3 percent of the first quarter and that of the total year is expected to exceed 10 percent, higher than the growth of 9.9 percent in 2005.

"However, it unnecessarily means that China has entered the interest rate rise cycle, though, theoretically, the space for such a rise is large as the gap between the interest rates of China and the United States is enlarging," said Tang.

Tang also predicted that China's Consumer Price Index (CPI) growth in the first six months may be lower than two percent and the trade surplus for the whole year may exceed 100 billion U.S. dollars.

However, he stressed that China does not pursue further growth in foreign exchange reserves, according to the China Securities Journal.

As for market speculations on whether China will enlarge the 0.3 percent floating band of the trading price between the dollar and the yuan, Tang said that China will promote the reform on exchange rate system step by step and whether to make big steps depends on market conditions.

Source: Xinhua