CHINA will not relax the national credit squeeze before the end of the year despite mounting calls from regional governments, a DBS Securities Hong Kong economist says.
Economist Pan Ming said there could be a relaxation after June next year, given the principles of China's economic cycles.
'After an examination on both monetary and economic statistics, we think a tight monetary policy, with a structural adjustments in credit allocation, banking lending and interest rates, would be beneficial to the development of the economy,' Mr Pan said.
Although China would continue to hold tight grip on monetary policy, he said the state would fine tune credit policies to favour pillar industries including agriculture, car and truck manufacturing, telecommunications, petrochemicals, and enterprises with promising prospects.
He expected the People's Bank of China (PBOC) to allow its local subsidiaries more flexibility to adjust discount rates in accordance with funding demands in different regions.
That was evident by the cut to the re-discount rate on loans to commercial banks by the Shanghai branch of the central bank this month.