960423

China to maintain

tight money

policy until 2000

BEIJING: China will maintain a tight monetary policy at least until the end of the century, but will be flexible when necessary in adjusting money supply, the central bank governor was quoted on Tuesday as saying.

Appropriately tight monetary policy was a long-term concern and would continue through the 1996-2000 Ninth Five-Year Plan, Dai Xianglong was quoted in the Financial News as saying.

China's fiscal tsars imposed a tight credit policy in 1993 when the world's fastest growing economy began to spin out of control. Enterprises had been racing to profit from a call by paramount leader Deng Xiaoping the year before to spur economic growth.

The central bank had then sought to cool growth as inflation soared to 21.4 percent in 1994, its highest point since the 1949 communist takeover.

Dai blamed high inflation in 1991-95 on soaring fixed-asset investment growth and rapid expansion of consumer spending. Low efficiency of China's economy was also to blame, he said.

China would stress the importance of production and supply of farm goods and focus on profitable industrial firms, he said, urging banks to improve service to large and medium state-owned enterprises and calling for loans to large state firms.-Reuter