China's M2 money supply, which includes cash and all deposits, rose 17.1% in April from a year earlier, exceeding its government target for a third month, Bloomberg reported. With new loans coming to US$54.9 billion in April – which means a total of US$234.5 billion in the first four months, more than half the figure for the whole of last year – the government is under renewed pressure to raise interest rates. There have already been three interest rate hikes since April 2006 and banks' reserve ratios, the proportion of funds they must hold in cash, have gone up seven times over the same period. China's economy grew 11.1% in the first quarter, up from 10.4% in the previous three months, while fixed asset investment rose 25.3% compared to 24.5% for the whole of 2006. Inflation hit 3.3% in March, the highest in more than two years and in excess of the central bank's target of 3%.
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