Dai Xianglong, governor of the People's Bank of China, painted an optimistic picture of the nation's economic health and declared that no such crisis was imminent.

"In light of economic fundamentals and development of the financial sector, financial risks in China are being contained, reduced and can be dissolved,'' Dai said at the China Economic Forum on the sideline of the Sixth World Chinese Entrepreneurs.

Dai admitted the ratio of non-performing loans of State-owned commercial banks is relatively high while capital inadequacy of some commercial banks and payment difficulties of a few small financial institutions still exist.

But he indicated China's outstanding external debt amounted to US$145.7 billion at the end of last year, with an aggregate debt-to-current-account-receipt ratio of 52.7 per cent and a debt-to-GDP ratio of 13.5 per cent. He also revealed a short-term-to-total-debt ratio of 9 per cent and a debt service ratio of 9.2 per cent, all at comfortable levels by international standards.

In fact, many participants have shown their confidence in the investment environment.

Anthony Francis Neoh, chief adviser of China Securities Regulatory Commission, said the Chinese domestic capital market has been the largest emerging capital market in the world following 10 years of development.

The combined market capitalization of the Shenzhen and Shanghai Stock exchanges at the end of 2000 was the ninth biggest in the world.

"But it is just at an early stage of development,'' said the adviser.

Focusing on the reform-driven development of the financial sector in China, Dai said China had by and large put in place an organizational system, market system and supervision and regulation system consistent with a socialist market economy.

He predicted China's GDP is projected to double and exceed US$2 trillion by the year 2010.

He said the objective of China's monetary policy is to maintain the stability of the value of the RMB, thereby promoting economic growth.

He stressed efforts will be strengthened in the following aspects:

In deciding an adequate growth rate of money supply. The total lending by financial institutions will reach 18 trillion yuan in 2005.

Taking good advantage of credit policy. Encourage those domestic firms with demand for foreign currency to borrow foreign currency loans from local commercial banks.

Steadily pushing forward the process of liberalization of interest rates.

Better co-ordinating the relationship between monetary policy and capital markets.

Finally, Dai promised that China will strengthen co-operation with other countries, especially with other central banks in Asia and will continue to support the role of the International Monetary Fund in global financial affairs.

"We welcome continued co-operative efforts from overseas Chinese bankers and entrepreneurs,'' Dai said.

(People's Daily 09/20/2001)