BEIJING, Sept. 28 (Xinhua) -- The policy makers of
China's central bank said at their third quarterly meeting that the country
should carry out "moderately tightening" monetary policies to further rein in
credit growth.

    They said the central bank should coordinate the
adjustments of interest rates and exchange rates and step up controls over the
liquidity within the nation's banking system to maintain "rational" growth of
lending.

    The policy makers suggested a close watch on the
potential impact of the U.S. subprime crisis to the Chinese financial market
despite the nation's economy being "generally stable".

    Increasing inflationary risks and rising assets
prices have added to the problems of excess investment growth and widening trade
surplus, they said.

    The central bank should carry out studies on the
problems to find a solution and "improve the quality of China's economic
growth", said the policy makers.

    China's commercial banks are entering a high risk
period for increasing housing mortgage loans, according to a report released by
the China Construction Bank (CCB), the country's second largest commercial
lender.

    The banks could face a rapid rise in mortgage
delinquency rates because of the frequent lending rate hikes and cheating in
housing mortgage loans, the report stated.

    China has raised the benchmark one-year lending rate
five times this year amid efforts to curb investment growth and cool the
overheated economy.

    Meanwhile, some mortgage recipients had cheated on
their applications and invested their funds in the stock markets, which had more
than doubled in value since the beginning of the year. Analysts believe a drop
in the markets could result in more bad loans.

    China's central bank vice governor Wu Xiaoling warned
commercial banks not to sacrifice credit control for high profits earlier this
month

    Statistics show new loans totaling 3.08 trillion yuan
(409.6 billion U.S. dollars) were approved in the first eight months this year,
and the figure is close to the total loans of 3.18 trillion yuan (422.9 billion
U.S. dollars) for 2006.