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Sign of slight slowdown in growth

(AP)
Updated: 2006-07-10 15:41

Fresh figures on new loans and money supply in China show signs of a slight slowdown, a report said Monday, although strong overall growth has boosted expectations of a further tightening in credit.

Chinese economic planners have expressed alarm at the surge in lending, saying it could lead to financial problems if investments in redundant factories and showcase real estate projects end up being unprofitable.

"Economic adjustment to tighten further in second half," a front-page headline in the China Business News said Monday.

It cited Jia Yinsong, an official with the National Development and Reform Commission, as raising four key problems: an excessively fast pace of growth in investment; excess liquidity, or too-fast growth in money supply; unbalanced foreign trade and severe hikes in prices for raw materials.

To help slow the economy's 10 percent growth pace and curb investment, the People's Bank of China, or central bank, has raised key interest rates, increased the amount banks are required to hold in reserve and issued repeated calls to more tightly control lending risks.

The projection comes as the China Securities Journal reported that China's M2, the country's broadest gauge of money supply, rose 18.4 percent in June from the same month a year earlier, down from a 19.1 percent increase in May. The journal often reports official financial data in advance.