Guo Shuqing says forex loans exceed international standards
The mainland's top foreign exchange official has sounded the alarm over the rapid growth of the country's short-term foreign debt, as Beijing tries to control the flow of hot money into the domestic financial system.
State Administration of Foreign Exchange (SAFE) chief Guo Shuqing warned in Beijing yesterday that the proportion of short-term loans in the total foreign debt burden exceeded international standards and was expanding to a dangerously high level.
The remarks, as reported in the Financial News - controlled by the central bank and other official media - did not include numbers of loans or other details.
China's short-term foreign borrowings last year totalled US$77.04 billion, a 38.1 per cent increase over 2002, according to SAFE statistics. Of total foreign currency loans, 39.8 per cent were classified as short-term debt, up from 32.6 per cent in 2002.
Speculators, betting that China will soon revalue its currency, have been borrowing money from overseas. Mainland banking and forex regulators believe that banks are also converting foreign currency into yuan for the same reason.