07-26-2009, 06:33 AM
BEIJING: Excessive bank lending in China is flowing into the stock and property markets and could inflate asset bubbles, a Chinese lawmaker and ex-central bank official said in comments published last Thursday. Many independent economists have sounded similar warnings about China’s surging money growth, but Wu Xiaoling, former People’s Bank of China vice governor, is one of the first officials to sound the alarm about bubbles. “Under conditions of overcapacity, excess money supply will not lead to rises in price indexes, but it could generate asset bubbles,” she said at a forum in comments reported by the Chinese-language National Business Daily. “The money has really gone out and if it is a time when there is no investment in the real economy and no one will put the money in banks to earn interest, then the funds will flow into the property market and stock market,” she said. reuters
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