A Talk With China's Top Central Banker
There is a new air of confidence at the People's Bank of China. With the government's three-year-old austerity program paying off, inflation, which hit an annual rate of 21% in 1994, retreated to a 7.7% clip in the first quarter. So People's Bank Governor Dai Xianglong decided on Apr. 30 to cut lending rates, by an average of three-quarters of a percentage point, for the first time since mid-1993. The new base rate for 6-month loans is now around 9.5%. But Dai is hardly looking toward easy money. In his first interview with a major Western publication, the urbane, 51-year-old central banker vowed that credit would remain moderately tight for the next five years.
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