China's government will step up its lending curbs and investment restrictions because industrial expansion by state companies has yet to be reined in sufficiently, Vice Premier Zeng Peiyan (曾培炎) said.
"We must increase structural adjustments," Zeng said in a speech to the World Economic Forum's China Business Summit in Beijing. "Macroeconomic adjustments have been effective, but these are just initial results. We can't relax the campaign."
PHOTO: EPA
China's industrial production growth picked up last month for the first time in six months, the government said Friday, suggesting lending curbs are having less of an impact. Inflation, which may be reported today, is forecast to have accelerated from a seven-year high, a Bloomberg survey showed.
"The government was too slow to implement measures to cool fixed-asset investment," Bruce Murray, chief representative of the Asian Development Bank in Beijing, said. "That's why the policies haven't been as effective as they might."
China has clamped down on lending to the steel, cement, real estate and other industries to cool an investment boom that it blames for causing power shortages, clogging transport links and driving up raw materials prices.
INVESTMENTS
China's investment in factories, roads and other fixed assets rose 32 percent from a year earlier last month, Wu Jinglian (
Zeng said the government will extend the loan crackdown to make it more difficult for state companies to expand. Authorities will continue to monitor investment in industries such as steel, autos and property, he said.
The central government plans to pare the number of business licenses and approvals required in an attempt to make the economy more market-oriented and reduce the influence of the state, Minister of the National Development and Reform Commission Ma Kai (馬凱) said at the forum.
Ma, who has berated local governments this year for fuelling "blind" and "haphazard" investments, said this year's slowdown in fixed-asset investment showed the government was right to use administrative measures to slow the economy.
"History will prove that this regulation avoided big ups and downs in the Chinese economy," Ma said. "We have to constantly enrich the content of macro regulation."
Interest rates
Economists including Qu Hongbin (
China should hold off from raising rates as higher borrowing costs may deter private investment, which is needed to drive economic growth and create jobs, said Cheng Siwei (程思危), vice chairman of the National People's Congress.
"We want to improve the effectiveness and efficiency of our investments," he said at the forum. "China doesn't want to slow economic growth."
Central bank Governor Zhou Xiaochuan (周小川) said last week that policy makers will decide whether to raise interest rates after reviewing last month's economic reports. China's inflation rate matches the People's Bank of China's one-year lending rate, which has been held at 5.31 percent since February 2002 and was last raised in 1995.
The central bank on Friday rejected media reports that it's told commercial lenders to prepare for a rate increase next month.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
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