People's Bank shifts focus to corruption, policy

PUBLISHED : Saturday, 02 February, 2002, 12:00am
UPDATED : Saturday, 02 February, 2002, 12:00am

People's Bank of China chief Dai Xianglong has vowed to pursue the twin goals this year of fighting corruption and maintaining a stable monetary policy.

Mr Dai said authorities would pursue the big cases and step up supervision of top financial cadres in a year of transformation.

'We must grasp the big and important cases, and strengthen our investigative and preventive work,' Mr Dai was quoted saying by Financial News, a newspaper published by the central bank.

'The investigative, disciplinary and organisational departments need to maintain close co-ordination and strengthen the supervision of leading cadres,' he told a meeting of People's Bank officials in Beijing.

He said the focus this year would be on fighting corruption and the misallocation of funds.

Mr Dai's remarks follow a series of scandals that have jolted the mainland's financial markets. The most prominent of them involves Wang Xuebing, who was sacked as head of China Construction Bank last year and detained in a probe of suspicious loans approved during his years at Bank of China.

Mr Wang was head of the bank's United States operations from 1988 to 1993 and ran the bank's overall operations from 1993 to 2000. The state-run bank has been hit with a record US$20 million penalty from US and Chinese banking regulators after a joint probe.

The Bank of China's Guangdong operations also have been tarred with allegations of embezzlement and the chief of Huaxia Bank, Duan Xiaoxing, was sacked last month for 'economic problems'.

Mr Dai described this year as one of transformation in the continuing fight against corruption and the effort to expand the bank's supervisory capabilities.

He also said the central bank would maintain a stable monetary policy with an appropriate increase in money supply to promote economic growth.

China's broad measure of money supply, M2, rose 14.4 per cent last year from the year before and the central bank has targeted growth of 13 per cent to 14 per cent this year.

Mr Dai did not rule in - or rule out - a cut in interest rates.

Many economists have called for an interest rate reduction to give economic growth a boost. There has been mounting speculation that a cut in lending and deposit rates of between 25 basis points and 50 basis points might be at hand.

Mr Dai said last month he would monitor economic developments to see if a cut was warranted.