China's credit growth to slow further: Official

Shanghai, Apr 16: China's credit growth will slow further as liquidity is restrained by the government's recent macroeconomic tightening measures, deputy central bank governor Wu Xiaoling was quoted as saying today.

The Shanghai Securities News quoted Wu as saying at a domestic seminar in the southern city of Guangzhou that China's money supply data for March showed the country's recent steps to curb credit growth had proved to be effective.

''With liquidity being tightened constantly, I believe future credit growth will slow further,'' Wu was quoted as saying.

Annual growth in China's broad M2 money supply eased to 17.3 per cent in March from 17.8 per cent in February, the central bank said on Thursday. The median forecast of 14 economists polled by Reuters was for a 17.5 per cent rise.

The central bank has slowed M2 growth from a peak of 19.2 per cent in January 2006 by raising banks' required reserves six times and interest rates three times in the past year.

Wu also said the latest surge in China's foreign exchange reserves was due to the country's trade surplus and the repatriation of foreign currency proceeds raised by Chinese enterprises, including state banks, through huge overseas stock sales.

It was also caused by currency swaps conducted between the central bank and commercial banks, she said.

China's foreign exchange reserves rose by 135.7 billion dollar in the first quarter, taking the world's biggest reserve stockpile to 1.202 dollar trillion, the central bank announced.

The increase was 73.37 billion dollar more than the 62.33 billion dollar sum of China's trade surplus and foreign direct investment in that period.

Reuters