Nov. 25 (Bloomberg) -- Industrial & Commercial Bank of China Ltd. Chairman Jiang Jianqing said he expects China to maintain tight monetary policy even though there’s room to adjust the provision of credit to “certain sectors.”
“Inflationary pressure in China is still very high,” he said at the opening of an Africa representative office for the world’s largest bank by market value in Cape Town yesterday. “I think the direction for China’s monetary policy and credit policy will still be very prudent.”
China has stepped up efforts to support cash-strapped companies in Zhejiang and rural areas hit by a credit squeeze that’s slowing the second-largest economy just as Europe’s debt crisis saps export demand.
The People’s Bank of China cut the reserve ratio for more than 20 rural credit cooperatives nationwide by half a percentage point. Bank of America Merrill Lynch predicts officials will lower the ratio for large commercial banks early in 2012.
Jiang said he doesn’t expect a quick resolution of the European Union’s currency and sovereign debt crisis.
“The crisis in Europe is far from coming to an end,” and debt problems being experienced there have developed into a liquidity and confidence crisis, Jiang said. “We do not know where the bottom is. We see a high possibility of a global recession.”
The European Commission on Nov. 10 slashed its euro-region growth estimate for next year to 0.5 percent from 1.8 percent, citing the debt crisis.
Europe still has “very strong fundamentals” and a sizable market, and is in “very advantageous position” to recover, Jiang said. He expects the 17-nation euro region to release a comprehensive package to address the crisis soon.
In Africa, ICBC bought 20 percent of Johannesburg-based Standard Bank Group Ltd., the continent’s biggest bank, in 2008.
By the end of last month, the two lenders had worked together on 110 projects across Africa, and ICBC had signed financing agreements worth more than $7 billion on the continent, according to a company statement.
ICBC aims to strengthen its ties with Standard Bank, and increase its understanding of the African market, Jiang said. The lender hasn’t immediate plans to open more offices in Africa, which “is growing very fast” and has great potential, he said.
Jiang declined to comment on whether he is considering taking up a post at the People’s Bank of China, saying “that’s just a rumor and I don’t comment on rumors.”
--Editor: Joshua Fellman
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