China's central bank Governor Zhou Xiaochuan (
"We never rule out the possibility of using further measures to curb liquidity," the People's Bank of China head told reporters in Basel, Switzerland, yesterday during the bimonthly meeting of central bank governors from the Group of 10 nations.
The bank is assessing "which measure is appropriate for the current economic situation," he said.
On Friday, Zhou ordered banks to set aside 9.5 percent of deposits as reserves to prevent a rebound in lending and investment in factories and real estate.
The central bank has also raised interest rates, sold bank bills and allowed the Chinese currency to strengthen in an attempt to stop cash from record overseas sales overheating the world's fastest-growing economy.
"There is too much liquidity out there and interest rates may have to go up sooner or later," said Tao Dong, Credit Suisse's chief Asia economist, by phone from Hong Kong. "There may be one or two more rate hikes in the coming six months."
The central bank raised banks' required reserves by 0.5 percentage points in June, July, November and last week after leaving them unchanged for more than two years.
The People's Bank estimates every increase of that size reduces the amount available for lending by 150 billion yuan (US$19 billion).
China raised interest rates twice last year to reach 6.12 percent. The central bank on Nov. 14 warned growth in fixed-asset investment, which has cooled since June, could rebound.
The rise in reserve requirements is aimed at cooling the economy without adding pressure on the yuan to strengthen, a possible effect of another increase in interest rates. The US and Europe accuse China of keeping its currency undervalued to make its exports cheaper.
The yuan has risen 5.9 percent against the dollar since a decade-long link to the US currency was scrapped on July 21, 2005. The yuan weakened 0.11 percent to 7.8132 to the dollar as of 4:18pm in Shanghai yesterday.
"We need to monitor further data to observe the effectiveness of the measures taken," Zhou said yesterday. "There is a little bit too much liquidity in the market at the moment."
The nation's trade surplus probably swelled 74 percent to a record US$177.3 billion last year, according to the median estimate of a Bloomberg News survey of 16 economists. The nation's foreign-exchange reserves have reached US$1 trillion.
The central bank "has noticed talks among the intellectual circle about a possible government plan" to set up a separate vehicle to manage and invest reserves, Zhou said, without elaborating.
China is set to take "more concrete" measures this year to improve reserve management, Zhou told reporters on Sunday.
The world's largest holder of foreign-exchange reserves has "always been adjusting its investment strategy," he said.
Along with raising interest rates and reserve requirements, the People's Bank has stepped up so-called "open-market operations," selling bills to banks to soak up a net 770 billion yuan last year, according to data from the official securities newspaper.
"Various measures taken by the central bank since 2006 have achieved some results in slowing down lending growth in the past few months," the People's Bank said, announcing the increase in bank reserve requirements on Friday.
Taiwan Transport and Storage Corp (TTS, 台灣通運倉儲) yesterday unveiled its first electric tractor unit — manufactured by Volvo Trucks — in a ceremony in Taipei, and said the unit would soon be used to transport cement produced by Taiwan Cement Corp (TCC, 台灣水泥). Both TTS and TCC belong to TCC International Holdings Ltd (台泥國際集團). With the electric tractor unit, the Taipei-based cement firm would become the first in Taiwan to use electric vehicles to transport construction materials. TTS chairman Koo Kung-yi (辜公怡), Volvo Trucks vice president of sales and marketing Johan Selven, TCC president Roman Cheng (程耀輝) and Taikoo Motors Group
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
RECORD-BREAKING: TSMC’s net profit last quarter beat market expectations by expanding 8.9% and it was the best first-quarter profit in the chipmaker’s history Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), which counts Nvidia Corp as a key customer, yesterday said that artificial intelligence (AI) server chip revenue is set to more than double this year from last year amid rising demand. The chipmaker expects the growth momentum to continue in the next five years with an annual compound growth rate of 50 percent, TSMC chief executive officer C.C. Wei (魏哲家) told investors yesterday. By 2028, AI chips’ contribution to revenue would climb to about 20 percent from a percentage in the low teens, Wei said. “Almost all the AI innovators are working with TSMC to address the
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”