Although China has the world's largest foreign exchange reserves, in the future China will continue to borrow some funds from international financial organizations and try to use them in an innovative way, said Zhang Xiaoqiang, deputy director of the State Development and Reform Commission (SDRC) last Friday.

He also said that China would use international commercial loans in a rational and prudent way.

Chinese foreign exchange reserves are now the largest in the world. Bank deposits continue to decrease and bank loans continue to surge. Despite these favorable factors, since there is not a proper scheme for people to transfer their deposits to investment, excessive liquidity and capital shortage both exist in the market. In the western region, many public sectors need a large amount of capital and this capital is not available at present.

When making international loans, China will try to ensure that the loans will be beneficial for China to realize a balanced development among different regions, that they can be put in key industrial sectors and be used effectively, Zhang said.

SDRC and the Asian Development Bank issued separate reports on Friday. According to this report, China will borrow some US$3 billion of loans from international financial organizations every year during the eleventh five-year period and for the next ten years. Eighty percent of these loans will be used for development in the middle and western region, and the old industrial bases in the northeast region.

(Chinanews.cn April 10, 2007)