Mon, Apr 13, 2009 - Page 12 News List

China's central bank to ensure liquidity

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China’s central bank said it would ensure sufficient liquidity to sustain economic growth, damping speculation regulators may seek to restrain credit after new loans jumped sixfold to a record last month.

The People’s Bank of China “will implement moderately loose monetary policy and maintain the continuity and stability of policy,” the central bank said on its Web site yesterday. It pledged “ample liquidity” to “ensure money supply and loan growth meet economic development needs.”

The statement indicates that reviving growth remains China’s priority amid concern that the credit boom will lead to bad debts and asset bubbles.

“It’s likely that the authorities will not change their stimulative policy at least for another month,” said Stephen Green, head of China research at Standard Chartered Plc in Shanghai. “This means fast loan growth will continue. The longer this goes on, though, the bigger the risk of asset bubbles developing becomes.”

New loans rose to 1.89 trillion yuan (US$277 billion) last month, with M2, the broadest measure of money supply, growing 25.5 percent, the central bank said on Saturday.

In the statement, the central bank also pledged to prevent loans from going to high energy or polluting enterprises or to industries where there is overcapacity.

It also reiterated support for loans to the agricultural sector, as well as to small and medium-sized companies.

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