BEIJING (Dow Jones)–Pushing forward liberalization of interest rates in China now could cause problems in areas including capital flows due to the country’s interest-rate gap with developed countries, Xinhua news agency on Sunday cited People’s Bank of China Gov. Zhou Xiaochuan as saying.
“It is not a very good time to push forward market-oriented interest rates,” Zhou said in the report.
Zhou also said China could widen the yuan’s trading band when the country’s capital inflows and outflows are more balanced, Xinhua reported.
China this year faces risks from the international economy despite a positive outlook for the domestic economy, and must be ready to combat external shocks with appropriate policy instruments, Zhou said.
Risks from local government debts and property loans in China are controllable, and containing inflation is less urgent than it was in 2011 due to a slowdown in price rises, the report cited Zhou as saying.
A global downturn would likely cause a mass withdrawal of foreign capital from China, Zhou said.
-By Owen Fletcher and Aaron Back, Dow Jones Newswires; 8610 8400 7702; owen.fletcher@dowjones.com
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