Tuesday's hike in China's key interest rate would be a prelude to suspension of its economic stimulus measures, Christina Liu, chairwoman of the Council for Economic Planning and Development (CEPD), said Wednesday. Referring to the rise of 0.25 percentage points in China's benchmark lending rates, its first increase since onset of the global economic crisis, Liu said this came as no surprise, given that Beijing had already raised its deposit reserve ratio several times. The rate hike, which included rises to 5.56 percent on a one-year loan and to 2.5 percent on one-year deposits, was aimed at lowering inflation pressure, Liu said at a meeting of the Legislative Yuan's Economic Affairs Committee. China experienced an inflation rate of 3.5 percent in August, which exceeded the 3-percent ceiling deemed acceptable by the Beijing authorities, she noted. The hike would also mean the beginning an end to the 4,000-billion-yuan (US$585 billion) stimulus measures introduced in 2008 to help weather the global economic crisis, she predicted, calling on Taiwanese businesses operating in China to better prepare for further withdrawal of the measures. For example, Liu said that export-oriented China-based Taiwanese enterprises should shift their market focus to China instead of the United States or Europe, and that they should also establish an information-sharing mechanism on China's domestic market. In related news, China's rate hike was described as 'healthy' by Central Bank of the Republic of China (Taiwan) Governor Perng Fai-nan. Speaking at Legislative Yuan's Financial Committee meeting, Perng said it would help maintain a stable economic development for China in the long as well as middle term. Perng declined to say whether China's higher interest rate would influence Taiwan's stock market. 'It's a highly sensitive issue, and I am not in a position to make any comment,' he said. Similarly, on whether it would affect Taiwan's monetary policy, Perng said that policy would be made by the bank's board of directors and supervisors based on considerations of the domestic and global macroeconomic situation. (By Hsieh Chun-wei & Bear Lee) ed/MH 