Chinese regulators have "enhanced the stability" of the nation's financial system by progressing with reforms and keeping economic growth steady, the central bank said in a statement on its website over the weekend.

 

"China is facing a more complicated global environment in maintaining financial stability and should keep a close watch on the spillover effects of global financial volatility," the People's Bank of China said in the statement, citing a new report on the nation's financial stability.

 

"The country needs to deal appropriately with potential pressure on price stability," the statement said.

 

Food prices in China have climbed this year, pushing the consumer price index to 3.4 percent in May, above the government's forecast of three percent, it said.

 

China should also develop a "multilevel capital market" to give companies a greater diversity of financing sources in addition to bank lending, it said, according to Bloomberg News.

 

(Shanghai Daily July 2, 2007)