China 'will not loosen banking deposit rates'

23 April 2012

China will not rush into loosening the deposit rates offered by banks in order to stabilise its economy.

That is according to Zhou Xiaochuan, governor of the People's Bank of China (PBOC), who has told Caijing magazine that the country's government has no plans to alter its longstanding attitude towards yuan reform in the near future, Reuters reports.

It had been speculated that Beijing may react to a recent deceleration in its gross domestic product growth by implementing several policy changes.

For instance, domestic demand in the Asian superpower could be lifted by a more flexible yuan and permitting banks to set their own deposit rates as China is currently too reliant on exports and investments.

However, Mr Xiaochuan has insisted there will be no change to the "gradualism approach" the PBOC has opted to take for many years.

"We are almost there and we must stick to the path," he noted.

Last week (19 April), the Chinese Ministry of Finance revealed the country's financiers will have to increase their loan reserve provisions as of 1 July this year.

By Gary Cooper

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