China's foreign debt continued to grow in 2004 on the back of the country's robust economic expansion and strong foreign trade performance, according to a central bank report released Thursday.

The People's Bank of China, the country's central bank, said that outstanding foreign debt stood at 228.6 billion US dollars at the end of last year, up 18.1 percent from a year earlier.

The outstanding volume of short-term liabilities, which should be serviced within one year, reached 104.3 billion dollars, 27.3 billion dollars more from the end of 2003, accounting for 45.6 percent of the total debts; the remaining are long and medium-term debts.

The rapid growth of the Chinese economy, registering a stunning 9.5 percent for 2004, required greater funding, while China's ongoing macro control caused a funding shortage and obliged businesses to borrow from overseas, largely by bringing down monetary and investment growth, analysts said.

The renminbi's much higher interest rate than the US dollar and expectations for the appreciation of the local currency were also important factors behind the rapid rise in foreign debt last year, they said.

But regulators insisted the current level of China's foreign debt poses little risk to the nation's financial security, given its huge foreign exchange reserves, which surged to 609.9 billion dollars by the end of last year.

Chinese authorities issued new rules governing foreign banks' foreign borrowings last May, requiring them to bring their outstanding loans from outside China to below the authorized ceilings by the end of 2004, and keep their short-term liabilities below the amount outstanding at the end of last June before the end of the year.

The debt figures released by the central bank do not include the liabilities of Hong Kong, Macao and Taiwan.

China's outstanding foreign exchange reserve hit a record 609.9 billion US dollars at the end of 2004, up 206.7 billion dollars from a year earlier, according to the report. The forex reserve increased 89.9 billion dollars in 2004, it said.

The bank said the US dollar depreciation and speculation on renminbi appreciation contributed to the foreign currency inflow. The renminbi exchange rate remained basically stable by the end of last year, the report said.

The central bank said in the report that the overall growth of renminbi-denominated savings deposits slowed last year.

The outstanding yuan savings deposits at financial institutions in China stood at 24.1 trillion yuan (2.9 trillion US dollars) by the end of last year, 3.33 trillion yuan (402.2 billion dollars) more that at the beginning of the year. The increment fell by a year-on-year 387.1 billion yuan (46.8 billion dollars).

The report said the slower growth of local currency deposits resulted from a fairly low interest rate levels and steep price hikes, which dampened people's wishes to deposit money in banks.

Since the central bank raised the interest rate on Oct. 29, China's first hike in nearly a decade, Chinese people had been putting more money back into banks, it said, citing that savings deposits rose a year-on-year 76.3 billion yuan (9.2 billion dollars) and 55.5 billion yuan (6.7 billion dollars) last November and December, respectively.

By the end of 2004, the outstanding amount of M2, the broad measure of money supply including money in circulation and all deposits, stood at 25.3 trillion yuan (3.1 trillion US dollars), up 14.6 percent over 2003. But the growth was five percentage points lower than a year earlier.

The outstanding amount of M1, the narrow measure of money supply including money in circulation and demand deposits of enterprises, rose by 13.6 percent. The increase was 5.1 percentage points less than a year ago.

The central bank said that the central government's macro-economic control policies helped to bring the growth of M2, which powers economic growth, back to a "rational" range beginning last August.

"The growth of money supply is rational as the country's economic expansion is concerned," according to the report.

Loan growth was "appropriate" in 2004 amid great efforts made by the central government to cool down the economy.

The outstanding renminbi-denominated loans at Chinese banks stood at 17.7 trillion yuan (2.1 trillion US dollars) by the end of last year, up 14.5 percent on the year. The growth rate fell 6.6 percentage points from a year earlier.

However, long- and medium-term loans, which are serviced in more than one year, added 1.37 trillion yuan (165.5 billion dollars), a figure the central bank said was "fairly big."

China implemented a raft of macro-economic control policies and domestic banks issued fewer loans to overheated sectors including real estate, steel, cement and aluminum last year.