Chinese Congress Debates New Role of People's Bank

AS China wrestles with double-digit inflation, the country's nominal legislature is considering measures that would give more clout to its would-be central bank.

In a session that began Tuesday, the National People's Congress is discussing a draft banking law that has been in the works for 15 years, as well as legislation on arbitration, labor unions, real estate development, and securities regulation.

Yet, as debate over the pace of economic reform continues among China's top Communist leadership, in recent months the rubber-stamp Congress has balked at taking steps to institutionalize and formalize market reforms. China is walking a fine monetary line, tightening credit last year to curb inflation but easing it in March and April to nip labor unrest at state enterprises.

According to Chinese press reports about the People's Bank of China's newly released annual report, M-2, a general money-supply measure that includes bank-savings deposits, is targeted to grow less than 24 percent in 1994. That is about the same rate as last year, when the economy grew more than 13 percent and inflation climbed above 20 percent.

The proposed law would legalize the People's Bank of China as the country's central bank and empower it to issue currency and oversee monetary policy. The bank would stop extending credits to and receiving deposits from nonfinancial organizations. The law would also give the bank monetary tools to set benchmark interest rates, make loans to national commercial banks, and buy and sell state bonds or foreign currencies.

``These powers will suffice for the central bank to control and adjust the currency supply and credit volume based on the needs of national economic development, and guarantee the overall balance of supply and demand,'' Zhou Zhengqing, deputy governor of People's Bank, told the New China News Agency.