The man who headed China's central bank for almost seven years is now boasting of the state bank loans he has obtained for the city of which he is now mayor. Tianjin mayor Dai Xianglong, 58, served as governor of the People's Bank of China (PBOC) from June 1995 until last December, when one of his major goals was to curb lending by the big four state banks and reduce their ratio of non-performing loans. In a case of the gamekeeper turning poacher, Mr Dai, on behalf of the Tianjin municipal government, has signed loan agreements with China Construction Bank, Agricultural Bank of China and the State Development Bank - all of which he used to regulate - totalling 39.7 billion yuan (HK$36.9 billion) for road, urban redevelopment and other projects. He has said Tianjin will spend 100 billion yuan on fixed-asset investment this year and 700 billion by 2007. China's GDP growth is now approaching 10 per cent and is increasingly being driven by state bank-financed fixed-asset investment, which ballooned more than 30 per cent over the first nine months of this year. But there are fears this economic strategy has led to overheating and could further damage the country's already fragile financial system if the state bank loans underpinning this growth turn bad. Agricultural Bank of China deputy president Yang Mingsheng said that his bank signed a 15 billion yuan loan agreement with Tianjin because it was bullish on the city's future and because of his relationship with Mr Dai. 'I still call him 'governor Dai'. We are very close,' Mr Yang was quoted as saying in the Economic Observer, referring to Mr Dai's former title at PBOC. Mr Dai's appointment in January as mayor of Tianjin, where he ranks second in the city after the Communist Party secretary, was a shock demotion analogous to US Federal Reserve chairman Alan Greenspan becoming vice-mayor of a second-tier American city. Most had expected Mr Dai to assume a senior post in the central government after a good record at PBOC. A Chinese banker said that Mr Dai was demoted because of the lack of political power of his patron, former prime minister Zhu Rongji. 'Dai resigned in December and stayed at home, waiting for a new appointment. With his record, he expected a promotion,' the banker said. 'Zhu also wanted this but was too weak and could not secure a good post for him. Everyone regarded Dai as a creature of Zhu. 'The story goes that, in desperation at the lack of news, Dai sent a letter to [then party chief] Jiang Zemin, setting out his accomplishments as PBOC head, including cutting the official bad-loan level at the big four state banks to about 20 per cent. 'When Jiang saw this figure, he was shocked at how high it was.'