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BEIJING, Sept. 28 (Xinhua) -- The policy makers ofChina's central bank said at their third quarterly meeting that the countryshould carry out "moderately tightening" monetary policies to further rein incredit growth.
They said the central bank should coordinate theadjustments of interest rates and exchange rates and step up controls over theliquidity within the nation's banking system to maintain "rational" growth oflending.
The policy makers suggested a close watch on thepotential impact of the U.S. subprime crisis to the Chinese financial marketdespite the nation's economy being "generally stable".
Increasing inflationary risks and rising assetsprices have added to the problems of excess investment growth and widening tradesurplus, they said.
The central bank should carry out studies on theproblems to find a solution and "improve the quality of China's economicgrowth", said the policy makers.
China's commercial banks are entering a high riskperiod for increasing housing mortgage loans, according to a report released bythe China Construction Bank (CCB), the country's second largest commerciallender.
The banks could face a rapid rise in mortgagedelinquency rates because of the frequent lending rate hikes and cheating inhousing mortgage loans, the report stated.
China has raised the benchmark one-year lending ratefive times this year amid efforts to curb investment growth and cool theoverheated economy.
Meanwhile, some mortgage recipients had cheated ontheir applications and invested their funds in the stock markets, which had morethan doubled in value since the beginning of the year. Analysts believe a dropin the markets could result in more bad loans.
China's central bank vice governor Wu Xiaoling warnedcommercial banks not to sacrifice credit control for high profits earlier thismonth
Statistics show new loans totaling 3.08 trillion yuan(409.6 billion U.S. dollars) were approved in the first eight months this year,and the figure is close to the total loans of 3.18 trillion yuan (422.9 billionU.S. dollars) for 2006.
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