According to country's central bank, the growth in forex reserves and the currency's appreciation in 1998 indicated the strength of its financial system.

The Peoples Bank of China (PBOC) attributed the rise in forex reserves to a growing trade surplus, aided by a crackdown on illegal foreign exchange transactions, The China Daily reported here.

China's trade surplus last year mounted to $43.59 billion, up 7.9 per cent over 1997. Analysts said China's expanding forex reserves would strongly support its pledge to maintain the value of yuan throughout 1999.

Meanwhile, the PBOC said it had also reached its financial control goals in 1998 by increasing the money supply and improving financial services.

China's money supply, a key barometer for economic activity, increased at a slower rate last year, which was consistent with its economic growth, the pboc said in a release. M2, the broadest measurement for money supply, which includes cash in circulation and all kinds of deposits, grew 15.3 per cent, down from 17.3 per cent in 1997.

Outstanding loans of all financial institutions grew 15.5 per cent to stand at 8.6524 trillion yuan ($1.0425 trillion) by the end of December.

Institutional deposits increased 16.1 per cent to 9.57 trillion yuan ($1.153 trillion), PBOC said adding personal saving deposits also grew rapidly in 1998. Personal savings grew 17.1 per cent to 5.43 trillion yuan ($654.3 billion), the bank said.

China has also set the target for this year's tax revenue at a higher rate than last year. Jin renqing, director state taxation administration said China's tax revenues must at least grow by 6.4 per cent this year over the base number to 946 billion yuan ($11.40 billion).

Tax revenues are the lifeline of our country, Jin was quoted as saying by Xinhua news agency. He called for redoubled efforts to crackdown on tax evasions and fraud in export refunding.

Last week, the state administration of taxation announced that China had reached its target of increasing industrial and commercial tax income by 100 billion yuan ($12.05 billion) in 1998.

Last year, the ratio of industrial and commercial tax revenues to the years gross domestic product was 10.7 per cent, up 0. 7 per cent from the previous year.