Auto financing has great room for development in China since loans granted for car purchases account for less than 1 percent of loans extended by Chinese banks, an economic expert has said.

Xu Hongyuan, vice-director of the Development and Research Department under the official State Information Center, made the remarks at the 2nd International Finance Forum Annual Conference, which finished Saturday in Beijing.

He said in mature markets such as the United States, Europe, Japan and Hong Kong auto loans usually account for cover 60 to 70 percent car sales. While the proportion hit a record of just 30 percent in developed Chinese cities in 2001 and the first half of 2002, and then saw a drop again.

According to central bank figures, outstanding auto loans in Chinese banks stood at 183.3 billion yuan (22.2 billion US dollars) at the end of last June and went down to 160 billion yuan (19.4 billion dollars) at end of September.

China's ongoing macro-economic control has brought down credit growth, but the amount of outstanding loans continues to climb, Xu said. A very small proportion of auto loans -- less than 1 percent -- indicates a good prospect for banks to develop.

China's economy now lies in the spiraling-up period, bringing more and more cars into families. Xu noted that the fast growth trend of the auto industry will not change.

Some people worry that China's consumer demand will slow after the interest rate hike announced recently by the central bank. But the auto industry is flexible and should not be severely affected, he noted.