The director of the research department of China's central bank says it will keep yuan interest rates unchanged next year and angrily denies China is exporting deflation to the world. The China News Service quoted Xie Ping as saying the central government's finance work group would meet this month to set policies for next year, on no change in interest rates and stable monetary policy, a decision that would be passed to the National People's Congress in March for approval. Mr Xie told a seminar the current interest rate of 1.98 per cent was the bottom and could go no lower. 'The re-discount rate is a little high but there is little possibility of it being lowered in the near term.' He expressed disappointment at the performance of the stock market. In the first 10 months of the year, it raised 73.6 billion yuan (about HK$69 billion), compared with 121.6 billion in the same period last year, with its share of total finance falling to 5 per cent from 8 per cent. This meant companies had to borrow more from banks to meet their financial needs, while in advanced countries companies obtained finance in equal measure from direct and indirect sources. The People's Bank is keen to increase direct sources in China - stocks and bonds - and decrease indirect sources - mainly loans - to reduce pressure on its banks. Mr Xie said Chinese continued to save diligently, despite interest rates of below 2 per cent, because of the lack of alternative investments. By the end of this year, individual deposits will reach 8.47 trillion yuan, an increase of 1.2 trillion over a year earlier, of which 41.1 per cent is in current accounts and a substantial amount in one-year fixed deposits. This hunger for saving is the major source of China's deflation. Mr Xie denied China was intentionally exporting deflation to the world. He did not address the issue of the level of the yuan. Bankers said the United States trade surplus with China this year would probably exceed that with Japan and the value of the yuan would increasingly become a bilateral issue. A Western banker said: 'Economically, the US does not have a strong case because it does not make most of the goods it imports from China and therefore these imports do not damage US companies.'