Inflation, investment concerns reiterated
(Shenzhen Daily/Agencies)
Updated: 2005-03-25 09:45

China's central bank Thursday reiterated its view that inflationary pressure had not fundamentally eased and that fixed-asset investment, which the authorities had been trying to restrain, could yet rebound.

The People’s Bank of China said in a statement on its Web site that monetary policy would remain “stable and healthy”.

“A foundation for a rebound in fixed-asset investment is still present and inflationary pressures have yet to fundamentally ease,” said the central bank’s monetary policy committee, which acts as an advisory body.

Chinese fixed-asset investment in the first two months of this year was stronger than expected, up 24.5 percent on a year earlier, and consumer prices rose a faster-than-expected 3.9 percent in the year through February.

As part of efforts by the government to cool the heated economy, the central bank lowered its money supply growth target to 15 percent this year from 2004’s target of 17 percent.

The broad money supply was 14.6 percent higher at the end of December than a year earlier, with growth slowing to 14.1 percent in the year through January.

The committee reiterated earlier commitments to “perfect” the exchange rate system while keeping the yuan basically stable.

Earlier on Thursday domestic media said a recent report by the central bank’s research department had cited bubbles in the real estate and manufacturing sectors as possible risks to banks and the currency.

“The problems of huge invisible financial losses and excessively large economic bubbles are all latent factors resulting in instability in the value of the currency,” the Shanghai Securities News quoted the report as saying.

Close