The People's Bank of China slashed the one-year term interest rates for US dollar, pound sterling, euro, Hong Kong dollar, Canadian dollar and Swiss franc.

They will be cut by 0.4375, 0.25, 0.1875, 0.3125, 0.0625 and 0.5 percentage points respectively.

The new interest rates are 0.8125, 2.5625, 1.875, 1.125, 1.5625 and 0.4375 percent.

Zhang Liqun, a senior researcher with the Development Research Centre under the State Council, said the move was a normal response to international markets.

Earlier this month, the US Federal Reserve announced it was cutting the dollar interest rate by an aggressive half percentage point, taking it to a four-decade low.

China's strong economic performance and large foreign currency reserves also required the nation to cut interest rates to increase the fluidity of foreign currencies, said Ding Maozhan, director of the Research Department of Beijing's Chongwen District Government.

The national economy grew a year-on-year 7.9 percent in the first nine months of this year and is expected to grow 8 per cent for the whole year.

Some other economists believe China's economy will grow at an annual rate of 7 percent in the coming two decades.

"There is really no need to keep such a large amount of foreign exchange reserves, as this will increase the country's financial burden," Ding said.

(China Daily November 20, 2002)