China central bank adviser urges against credit contraction: report

[BEIJING] China should avoid credit contraction but also keep inflation expectations from intensifying, the 21st Century Business Herald quoted central bank policy adviser Wang Yiming as saying on Tuesday.

"We should not only avoid credit contraction, but also avoid strengthening inflation expectations," Wang said.

China's credit trends are being closely watched by investors who are increasingly worried about policy tightening as Beijing looks to exit from emergency measures now that the economy is quickly regaining momentum.

Data on Monday showed new bank loans in China rose more expected in March from the previous month but broad credit growth slowed, as the central bank walks a tightrope between supporting the recovery and containing debt risks.

Last week, China reported a factory price gauge rose at the fastest pace in nearly 3 years in March, while consumer prices saw modest gains.

Mr Wang also said China should make contingency plans to cope with possible policy changes by the US Federal Reserve.

"The US Federal Reserve has said that it's unlikely to make a policy shift in the short term. But we need to do a good job in making contingency plans..., so as to leave enough space to deal with new uncertainties," Mr Wang said.

REUTERS