Austere policy pays dividends on mainland

PUBLISHED : Sunday, 25 August, 1996, 12:00am
UPDATED : Sunday, 25 August, 1996, 12:00am

THE governor of the People's Central Bank of China says the country is likely to surpass its inflation and other economic targets this year.

Gross domestic product could be nine per cent instead of eight per cent, and retail inflation seven to eight per cent instead of 10 per cent, said Dai Xianglong .

China could also have considerably more foreign exchange reserves than it thought by year-end, topping US$100 billion (HK$773 billion) from US$90.8 billion at the end of July, he added.

The turnaround since China launched its austerity measures has been staggering. Not long ago, the country was posting inflation of 25 per cent.

The strong performance allowed the People's Bank of China to cut interest rates last week for the second time in less than four months.

Nevertheless, the Central Bank governor insisted China 'will not abandon its moderately tight monetary policy in the next few years'.