AUTHORITIES are expected to continue their tight credit policy to fight inflation despite an increase of more than 30 per cent in bank savings. According to sources close to the People's Bank of China, this year's savings will climb 34 per cent to reach more than 3,900 billion yuan (HK$3,545 billion). Last year China had total savings of 2,923 billion yuan, which included the savings of individuals and enterprises. In the first six months of this year, personal savings rose by 314 billion yuan while the increase of enterprise savings hit 215 billion yuan. According to the latest forecast by the People's Bank, the Government's central bank, the annual increase in total savings is likely to top 1,000 billion yuan by the end of this month. Sources also said the state bank loans for this year would soar to 800 billion yuan, about 21 per cent over last year's 662 billion yuan. A large proportion was allowed to flow into real estate and stock markets because of lax controls. They added higher commodity prices and excessive fixed-asset investment saw China's nationwide money supply expand 34 per cent this year. The People's Bank has vowed to limit the increase to between 20 per cent and 25 per cent in future. While admitting that some enterprises were still complaining of a capital shortage, the Vice-President of the bank, Dai Xianglong, was quoted in yesterday's China Daily as saying that the current money supply was 'too much'. He said the high supply was helping to fuel national inflation, which stood at a year-on-year rate of 27.7 per cent in October. Last September, the bank boosted three, five and eight-year term deposit interest rates by 5.62 per cent in a bid to reassure depositors their savings would not be eroded by inflation. But official interest rates are still far below the inflation rate. For instance, last September's inflation was 27.4 per cent. Increases in money supply must be kept in line with economic progress, Mr Dai said, adding that the central bank should impose tighter controls on loan rates and scales. The bank is known to favour a rise in interest rates, but the Government is extremely wary of the consequences on the ailing state-run sector. It is believed that most state-owned enterprises would have to close without cheap credit. Meanwhile, the State Commission of Restructuring the Economy has scheduled a national planning work meeting tomorrow. The meeting, which will be attended by provincial leaders and heads of various ministries, will discuss specific target figures for economic growth and inflation. Sources said economic growth was initially fixed at nine per cent while inflation should be controlled under 10 per cent. The meeting follows an earlier national work meeting on the economy in which senior officials were urged to 'unify their thinking and understanding'.