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Key Risks to Watch in China

This is a transcript of top stories presented by China's CCTV Business Channel as produced by CNBC Asia Pacific.

Good evening,

I'm Saijal Patel from CNBC and you're watching "Asia Market Daily".

China unleashed an extraordinary surge in bank lending in 2009 to foster its economic growth in the wake of the global financial crisis.

This year though, the PBOC has been trying to rein in lending and money growth, to stop the economy over-heating.

Chinese banks had issued a total of 7.44 trillion yuan in net new loans by the end of November, putting them firmly on course to overshoot this year's credit target.

To combat this, China raised the Reserve Requirement Ratio half a dozen times in 2010, to a record high of 19 percent for the nation's major banks.

So what can we expect in 2011?

Barclays Capital's Head of China Bank Research expects the PBOC to keep tightening.

(SOT) May Yan, Director, Head Of China Bank Research, Barclays Capital:

"I think it's going to continue. This is actually the most convenient tool used by Central Bank in China. They have raised RRR six times this year, each time 50 basis points. I think it's likely going to be another at least another three or four times in 2011."

China has decided to adopt a prudent monetary policy for 2011, in part due to rising price pressures.

But Beijing has yet to announce its loan target for next year.

China analyst Fraser Howie says curbing inflation is just one of the three main concerns facing the Mainland next year, along with asset bubbles and the property sector.

(SOT) Fraser Howie, Managing Director CLSA Singapore:

"You cannot worry about monetary policy or trying to adjust things if you're basically tying both your hands behind your back. They have administratively set interest rates and they have a fixed or pegged currency, and then they're surprised there's inflation, you know they simply have no choice. Unless they seriously interest rate reform and currency policy then these problems will just continue to grow in the economy."

Thanks for watching "Asia Market Daily".

I'm Saijal Patel from CNBC.

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