The People's Bank of China may move to slow down lending by raising mandatory bank reserves and expanding open-market operations, state media reported, quoting the bank's as yet unreleased annual report. When the report becomes public it will allegedly warn of the emerging negative impact of over-investment in some sectors and caution that potential financial risks are increasing. The bank raised its benchmark lending rate for the first time in a year and a half and has not raised the bank reserve ration since April 2004. The China Securities Journal called for new controls on capital outflow following the revaluation of the yuan and looser foreign exchange controls.
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