China's low interest rate would not encourage lending, People's Bank of China governor Zhou Xiaochuan said Friday. He also said a net interest spread should be maintained between lending and deposit rates. He reportedly told the 2009 BusinessWeek CEO Forum in Beijing that low interest rates, especially the deposit rate, would reduce pressure on financial institutions and thus they would not actively provide financial services to the real economy, Xinhua News Agency reported citing Zhou.
China last cut interest rates on December 23, the fourth cut in five months, leaving the benchmark one-year deposit rate at 2.25% and the lending rate at 5.31%. China has repeatedly said it will continue easy monetary policy and accomodative fiscal policies to support the economy.
Also on Friday, Bloomberg reported Zhou as saying that China is "passive" on the value of the U.S. dollar. "It's like watching a tournament," Bloomberg quoted Zhou as saying at the same event. "We just watch the game. Regardless who wins or loses, the issue of whether the winner or loser benefits the spectator doesn't arise."
Elsewhere, an opinion piece published in the People's Daily today said allowing the yuan to appreciate now would only serve to damage the global economic recovery. The People's Daily is the official newspaper of the Communist Party of China
Yesterday, the Organization for Economic Co-operation and Development limited exposure to the financial crisis and huge stimulus helped China to lead the global recovery. Annual Chinese GDP growth is projected to exceed 8% in 2009 and 10% in 2010, before easing slightly in 2011. At the same time, inflationary pressures are likely to remain subdued.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.