* C.bank chief: economy relatively strong, inflation a risk
* Says may impose differentiated reserve requirements
* Says financial regulation should be "counter-cyclical"
(Adds details, quotes)
BEIJING, Jan 5 China's central bank governor
Zhou Xiaochuan warned that inflation was mounting and that more
could be done to guide the growth of money, an indication that
price pressures still top the list of official concerns.
In an interview with a magazine run by the People's Bank of
China, Zhou spoke confidently of the country's economic growth
prospects, but sounded a more cautious note on inflation, which
is running at its fastest in over two years.
"China's economy is continuing steady and relatively fast
growth. The recovery trend has been further strengthened and
growth momentum is relatively strong," Zhou said.
"But our country is also facing rising inflationary pressure
and expectations," he said.
Zhou's warning on price pressures is the latest from
officials in China, where 28-month high inflation and record
house prices have sown public discontent, a concern for the
In keeping with recent vows to use a slew of monetary policy
tools, Zhou said Chinese lenders could be ordered to lock up
different-sized portions of their deposits at the central bank,
an administrative measure that limits lending.
Of late, Chinese central bank officials have repeatedly
floated the idea of using such differentiated reserve
Shanghai Securities News, an official paper, said on
Wednesday that requirements will be based on a bank's role in
the economy, citing unnamed sources. [ID:nTOE704004]
Zhou said such a measure would help ensure reasonable money
growth in the world's second-largest economy and should fall
under the aegis of an overall policy that is designed to be
Without elaborating, he said the central bank was also
considering raising capital requirements for "systematically
important" Chinese banks to cut risks in the banking sector.
"We may dynamically adjust selective reserve ratios and
further enrich our monetary policies to guide a reasonable
growth in money and credit," Zhou said.
Many economists have blamed excess cash in China's monetary
system -- in part the result of the nation's 2009 record bank
lending spree -- as a key driver of inflation.
But Zhou took aim instead at the United States, China's
biggest single trading partner.
"The quantitative easing policies adopted by the U.S. and
other major economies have a noticeable spill-over effect on
international liquidity, which further intensifies imported
inflationary pressure," he said.
China's top leaders have said repeatedly in recent weeks
that taming price pressures is a priority this year.
In a nod to that, China Securities Journal, an official
newspaper, said the government should let the yuan rise 5
percent this year to rein in imported inflation. [ID:nTOE704008]
(Reporting by Aileen Wang and Koh Gui Qing; Editing by Simon
Rabinovitch and Toby Chopra)