Bangkok--25 May--Standard & Poor's
China's central bank needs to sharpen its knives. Monetary tightening measures have so far failed to rein back runaway economic growth or stop share prices from reaching vertigo-inducing heights. Further measures expected in the second half of 2007 are likely to have only a limited cooling effect. That's according to an article released today by Standard & Poor's Ratings Services titled "Can China's Central Bank Do More Than Roar As Growth Soars?".
The article explains that a judicious mix of interest, exchange, and reserve rate adjustments, as well as direct administrative measures, will be the key to dampening unsustainable growth and safeguarding long-term stability. "A heavy-handed approach, however, could have a significantly negative impact on the economy," said Standard & Poor's credit analyst KimEng Tan.
The article also discusses China's banking sector. "We maintain our positive outlook on the banking sector over the medium term," said credit analyst Qiang Liao. "Reform initiatives remain on track and credit profiles continue to improve." Nevertheless, small banks--in particular small city commercial banks--are likely to face more pressure than their stronger counterparts over the near term as a liquidity-tightening cycle weeds out weak corporate players.
The article is available to subscribers of RatingsDirect, the real-time web-based source for Standard & Poor's credit ratings, research, and risk analysis, at www.ratingsdirect.com . Media representatives may contact Kenny Jiang at (86) 10-6569-2959.
Media Contact:
David Wargin, New York (212) 438-1579
[email protected]
Analyst Contacts:
KimEng Tan, Singapore (65) 6239-6350
Qiang Liao, Beijing (86) 10-6569-2915
Ryan Tsang, CFA, Hong Kong (852) 2533-3532
Standard & Poor's, a division of The McGraw-Hill Companies (NYSE:MHP), is the world's foremost provider of financial market intelligence, including independent credit ratings, indices, risk evaluation, investment research and data. With approximately 8,500 employees, including wholly owned affiliates, located in 21 countries. Standard & Poor's is an essential part of the world's financial infrastructure and has played a leading role for more than 140 years in providing investors with the independent benchmarks they need to feel more confident about their investment and financial decisions. For more information, visit http://www.standardandpoors.com .
Key Contacts:
Americas Media Relations: (1) 212-438-6667
media_ [email protected]
Americas Customer Service: (1) 212-438-7280
[email protected]