Chinese central bank chief Zhou Xiaochuan acknowledged today that a bubble in the country's stock market was a concern and said the central bank was monitoring asset prices along with inflation.
China's main stock index, the Shanghai Composite Index, has surged about 235 per cent since the startof 2006 and more then 40 per cent so far this year, but has also shown some volatility, including a 9 per cent fall in February that led to market declines worldwide.
The values of many stocks relative to company earnings are high compared with international benchmarks and historical levels.
Asked if he was concerned about the build-up of a bubble in China's stock market, Zhou said, "Yes."
"For currency stability, we watch over CPI (Consumer Price Index), PPI (Producer Price Index) and also asset prices," said Zhou, governor of the People's Bank of China.
China's growing trade surpluses with the United States and the European Union have led to massive cash inflows, which have fuelled rapid growth in loans and investments but also led to nervousness about the sustainability of China's economic boom.
