China has succeeded in curbing investment and credit growth, and the priority now is to free up interest rates, a central banker said in remarks that may signal long-awaited capital market reforms are drawing nearer.
The remarks by Mr Li Ruogu, deputy governor of the People's Bank of China, came as August retail sales data showed a 13.1 per cent rise from a year earlier, a bit weaker than expected but strong enough to reassure economists that consumption is cushioning a slowdown in capital spending.
"The most important thing is to further push market-oriented reforms of interest rates, with the ultimate goal of making interest rates, the exchange rate and the price of capital truly reflect market supply and demand," Mr Li said.
Mr Li's comments were carried on the website of the China Securities Journal ( www.cs.com.cn) today, a day after Premier Mr Wen Jiabao told a cabinet meeting that Beijing must hold firm to its curbs on investment and lending.
"The key to improve macroeconomic controls in the near term is to implement the government's cooling measures and to maintain stability of policy," Mr Wen said.
Echoing the premier, Mr Li said the government would watch the economy closely and take any "necessary measures" to ensure stable and balanced growth.