BEIJING, Dec 29: China’s central bank will implement a tight monetary policy in 2008, using a range of tools to keep a check on liquidity, central bank governor Zhou Xiaochuan said in comments published on Saturday.

The People’s Bank of China has waged a war on excess liquidity and inflation in 2007, raising interest rates six times and increasing the proportion of deposits that banks must hold in reserve 10 times, to a record level.

Still, annual consumer inflation is running at the quickest pace in over a decade, and many economists are concerned that it could spill over from food into the broader economy.

In a New Year’s address to his staff, Zhou said that 2008 would bring fresh challenges.

(We must) step up and improve macroeconomic controls, expand the role of monetary policy in economic controls, carry out a tight monetary policy, make coordinated use of a range of monetary policy tools and use effective measures to step up management over liquidity, he said.

Zhou’s comments echo a shift in policy articulated at a recent government economic work conference, at which Beijing said it would move to a “tight” monetary policy from the previously “prudent”, or slightly more accomodative, one.

Zhou gave the central bank good marks for 2007, saying it had improved its use of financial and macroeconomic controls and stepped up the effectiveness of monetary policy.

He made no assessment of current economic conditions, including any views on inflation.

Zhou also reiterated the PBOC’s long-standing view that it will work to improve the yuan’s exchange rate regime, adding that it would seek to better adjust domestic demand and improve the balance of international payments.

FOREIGB DEBT: China’s foreign debt rose to $345.7 billion at the end of the third quarter from $327.8bn at the end of June, the State Administration of Foreign Exchange said on Saturday.

The figures show a renewed rising trend after June statistics marked the first quarterly drop in foreign debt for more than two years.

Short-term foreign debt rose to $197.7bn at the end of September from $184.9bn the previous quarter, while medium and long-term foreign debt edged up to $148 billion from $142.9 billion, SAFE said in a notice on its Web site.

Short-term debt accounted for 57.2 per cent of total foreign debt at the end of September, up slightly from 56.4 per cent, the foreign exchange regulator said.

China has been trying to limit inflows of speculative money by curbing short-term foreign exchange borrowings.---Reuters