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China's economic problems easing: PBOC deputy head
(Reuters)
Updated: 2006-11-23 15:00
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Speaking at a financial conference, Su also said the yuan was becoming more flexible and reaffirmed the central bank's determination to make interest rates more market-oriented and to promote the domestic bond market.
"Currently, the outstanding issues with the economy have eased," Su said. "Over-rapid economic growth is being brought under control initially, with investment and industrial output slowing and money and credit growth is gradually easing."
Since late April, the central bank has raised intererst rates twice and banks' reserve requirements three times to calm an investment frenzy fueled by plentiful liquidity generated by a balance-of-payment surplus in the order of 10 percent of GDP.
Supported by administrative orders to cut out wasteful spending, the measures have helped to slow annual growth in fixed-asset investment to 26.8 percent in the first 10 months from 31.3 percent in the first half.
Annual gross domestic product growth has eased in tandem, to 10.4 percent in the third quarter from 11.3 percent in the second.
As Su spoke, the central bank set the yuan's midpoint at the highest level since it was cut loose from a dollar peg in July 2005 and allowed to float within managed bands.
At 7.8596 per dollar, the currency has now gained a further 3.18 percent on top of the 2.1 percent revaluation that accompanied the depegging.
"The flexibility of the exchange rate system has increased, with the role of market forces gradually showing through," Su said.
Underlining the incremental nature of bond market reform, the official China Securities Journal reported on Thursday that Cinda Asset Management Co. had won approval for the country's first securitisation of non-performing loans.
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