Center

Nation cuts overseas borrowing

By Xin Zhiming (China Daily)
Updated: 2007-03-03 08:43

Quotas will be slashed for short-term overseas borrowing by both domestic and foreign financial institutions to "maintain the basic balance of payments".

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The State Administration of Foreign Exchange (SAFE) said on Friday on its website that domestic banks' quotas for foreign borrowing, or debt, will be reduced gradually to 30 percent of the 2006 level by the end of next March.

It said overseas borrowing by foreign banks and non-banking financial institutions could constitute up to 60 percent of the 2006 level within the same time limit. SAFE did not reveal the 2006 level.

The currency regulator also said that from April 1 it will include more types of borrowing in its short-term debt quota management regime, such as overseas institutional deposits.

SAFE said the move aimed to regulate short-term borrowing by financial institutions, safeguard national financial security and promote the balance of payments.

China has the world's highest foreign exchange reserve. By the end of 2006 its reserve had exceeded $1 trillion.

SAFE also said it was concerned that foreign debt, especially short-term debt, had grown "too fast" in recent years.