BEIJING, June 1: China’s central bank governor Dai Xianglong has upped the bank’s target for money supply growth in 2002 to 14 per cent, in an effort to fight deflationary pressures, state press said on Saturday.

During a meeting of the People’s Bank of China on Friday, Dai raised the M2 broad money supply target for the year by one precentage point from the 13 per cent target set at the beginning of the year, the China Daily reported.

Much of the M2 increase will come as the central bank encourages faster growth in commercial bank lending, including more loans to rural cooperatives and small enterprises, the report said.

The increase in the money supply target comes as Dai also discounted the possiblity of another cut in interest rates, it said.

China has slashed interest rates eight times since 1996, with present rates at the lowest level in two decades.

Consumer prices in the first four months of the year were down 0.7 per cent compared with a year earlier, slightly more than the 0.6 per cent fall in the three months to March, the National Bureau of Statistics said last month.

Consumer price index rose by 0.7 per cent in 2001 after two months of negative prices in the November and December, despite massive fiscal pump priming that began in earnest with the 1997-1998 Asian financial crisis. —AFP