CHINA / National

43% of bankers believe economy overheated
Updated: 2006-06-18 14:15

Latest survey by China's central bank shows that 42.6 percent of bankers in the country believe that the macro economy is overheated, and 26.6 percent think the situation will continue.

The People's Bank of China and the National Bureau of Statistics quarterly send questionnaires to principals of all kinds of banks including foreign-funded ones, asking them about impression upon the current economic situation.

Some 42.6 percent of bankers think the macro economy is overheated in the second quarter of this year, and 26.6 percent predict such situation will continue in the next quarter, which is the maximum ratio in history.

China's economy is facing heightened overheating signs, as outstanding bank loans surged 15.97 percent year on year by the end of May amid a seemingly unabated investment binge.

So as to cool down the overheated economy, the People's Bank of China in April raised the minimum rate commercial banks charge on one-year loans in local currency, the yuan, 27 basis points, to 5.85 percent in an aggressive move to discourage lending. It was the first increase since October 2004.

The survey, however, shows that 18.5 percent of bankers still think the current monetary policy is too mild and further tightened policy may come out in the next quarter. This is also the maximum ratio in history.